India opted out of RCEP to protect domestic industry from cheap imports: Piyush Goyal

India's decision to not join the Regional Comprehensive Economic Cooperation (RCEP) was to protect local companies from cheap imports, Commerce and Industry Minister Piyush Goyal said on November 5.

"We wanted agriculture, dairy out of regional trade pact," Goyal said at a press briefing.

The Indian government on November 4 announced that it has decided not to join the RCEP as negotiations failed to address New Delhi's concerns.

Goyal said that India took a tough stand during RCEP negotiations as concerns on dairy, pharma, agriculture, and chemicals were not resolved.

Goyal said that India's key concerns include high trade deficit, protection against unfair surge in imports, and market access for services and that India has sought tighter rules of origin in RCEP.

"Our demands mainly were balancing the trade deficit, protect domestic industry from indiscriminate surge in imports, steps on non-tariff barriers and to get a good opportunity for Indian goods and services in foreign markets," Goyal said.

The minister said that India wanted 2019 as base rate for duty cut instead of 2014.

He said that during negotiations, India raised the point that the rates of 2014 were no longer valid and instead 2019 rates should be taken as the base rate.

"In order to prevent surge of dumping by other countries, India devised an auto trigger safeguard mechanism," Goyal said.

One of the key issues in the RCEP negotiations was regarding the base year. India is opposed to the proposal that 2013 be treated as the base year for reducing tariffs, effectively implying that member countries should slash import duties on products to the level that existed in 2013. India was pushing for 2019 as the base year, given that import duties on many products such as textiles and the electronic products have gone up in the last six years.

Goyal said that for the present, not joining RCEP is the final decision but if India's demands are met, then the government is open to discussions and negotiations.

"We aren't joining RCEP. But if all our demands are met... Then I think every government is always open to discussions and negotiations," he said.

On being asked whether India fears isolation, Goyal said that India has not got out of the pact in an acrimonious manner and had the government left the negotiation table in 2014 after the government changed, it could lead to uncertainty in trade, economic and political relationships.

"We have put forth our issues with logical reasoning. The other countries have all appreciated India's concerns," the minister said.

The countries in RCEP include the 10 ASEAN countries — Indonesia, Thailand, Singapore, Malaysia, the Philippines, Vietnam, Myanmar, Brunei, Cambodia, Laos —and their largest trading partners—Australia, China, India, Japan, New Zealand and Korea.

The deal, once implemented, would create the world's largest trading bloc. These 16 countries  account for about half of the world’s population, 25 percent of global GDP, nearly a third (30 percent) of global trade and the 26 percent of world foreidng direct investment flows (FDI).

India's worry was that the RCEP could force India to cut duties on about 90 percent of the goods that are currently imported to India over the next 15 years. This raised concerns that India will be flooded with cheaper imported goods, particularly from China and dairy products from Australia and New Zealand.