Apac services exports won’t make up for imports of goods
India is likely to gain only $2-10 billion by exporting services to 15 Asia-Pacific countries under the proposed mega regional trade agreement, a premier think tank has told the government. The likely gains from services exports will not compensate for the higher amount of goods imports, especially from China, under the Regional Comprehensive Economic Partnership (RCEP) trade pact, it said.
India exported $38 billion worth of services to the grouping last year.
The government last year appointed Indian Institute of Management-Bangalore, independent think tank Indian Council for Research on International Economic Relations and the Centre for Regional Trade, a think tank under the Department of Commerce, to work separately to prepare a roadmap for negotiating RCEP by holding stakeholder consultations.
“The gains in services could only be in the range of $2-10 billion. It is unrealistic to expect higher liberalisation of services,” said a member of one of the institutes.
RCEP is a regional trade agreement spanning the 10 Asean countries and the group’s six free-trade agreement partners — Australia, New Zealand, Japan, China, South Korea and India. Though negotiations on seven of the 16 chapters of the agreements are complete, the key areas of goods, services and investment are still being negotiated.
In the April-January period of 2018-19, India’s merchandise exports to the region were $55.3 billion while imports were $145.9 billion, leaving a trade deficit of $90.6 billion. The trade gap with China alone was $53.4 billion for the whole of FY19.
“An assessment of the services negotiations indicates that the progress has been asymmetrical with disinterest in moving forward in services while in goods, the ambition continues to be at a significantly high level, quite contrary to what has been envisaged in the guiding principles,” said an official aware of the negotiations.
India’s major proposals, which have been rejected by the RCEP countries due to their fears over migration and loss of jobs, include a more business-friendly visa regime through a visa-fee waiver on a common reciprocal basis, and an RCEP Business Travel Card aimed at facilitating liberal movement of professionals and tourists in the region.
“There is a lack of diversification of trade in this region, and even the gains in information technology, which is our largest service export, are limited,” the member said.
Movement of professionals
Besides IT, there is scope to expand business services which include management and consultancy, hospitality, travel and tourism, health and education.
However, India is not competitive in infrastructure and manufacturing services such as logistics, transportation and construction, and is unlikely to make gains in these under the pact, as per the think tank.
Another complication has arisen with Singapore, Malaysia and Japan joining the ranks of Thailand, the Philippines and Brunei to come out with a negative list from the positive list. Under their respective ‘negative’ lists, countries will state the exceptions to services they want to open up.
“Although, India initially objected to this early transition on the grounds that the verification process is time consuming, we have also decided to transit from positive to negative list by mid-2019,” the official added.
Given the situation, India has intensified its bilateral engagement with several countries in an attempt to seek further improvements in their offers, particularly on movement of professionals and IT-related Services.
Source :- Economictimes.indiatimes.com