Another Stand-Off Involving China Over Mega Asia Trade Pact, In Hyderabad

In Hyderabad a 16 nations meeting is happenin on a mega Asia trade pact in the shadow of elevated border tensions between India and China, a wrinkle that could further slow progress on the deal.

Trade officials gathered in the Andhra Pradesh capital are seeking to hammer out agreement on sticky issues like the free movement of people in the pact that takes in the world's second and third-biggest economies -- China and Japan -- but does not involve the U.S.
The Association of Southeast Asian Nations is urging by China with the the 10 members, along with India, Australia, New Zealand, South Korea and Japan, to wrap up the Regional Comprehensive Economic Partnership as soon as possible.

India is making it clear it won't rush toward an early conclusion of the trade talks and is insisting on mobility for its highly-skilled workers. Among Asean nations that demand has raised concern who view such a move as a potential threat to their domestic economies.

The battle lines have been drawn, said Amitendu Palit, a senior research fellow at the Institute of South Asian Studies at the National University of Singapore.
"The challenge for RCEP is that China would want a quick end to the deal so that it can establish itself as a leader of world trade," said Palit. "Japan, New Zealand won't be in favor of concluding early as they would want a high quality agreement."

Tough Stance

After President Donald Trump pulled the U.S. out of the separate 12-nation Trans-Pacific Partnership shortly after he took office, all eyes are now on the Asia trade pact, which would account for almost 30 percent of global gross domestic product and over a quarter of exports.

While along their border the situation remains tense, India will actively engage with China and other member nations in the talks.

Better offer is willing to be given by India for broader tariff cuts on goods to RCEP countries, although it expects similar concessions on services, the people said, asking not to be identified given the confidential nature of the discussions.

Over 50 percent to India's GDP contributed by the service sector and any trade pact that fails to reflect this lacks ambition and is not commercially meaningful, the people said.

"In terms of how it need we have certain reservations to be taken forward, like seeing more progress on the services track," said Ashok Kantha, the Indian ambassador to China.
"We'd like to see a more balanced opening, a trade liberalization" covering both goods and services, he said, adding there is particularly strong concern about India's more than $51 billion trade deficit with China.

In a weeks-long standoff over an area where Indian, Chinese and Bhutanese territory meet in the remote Doklam region of the Himalayas the two Asian powers have been engaged.

India is also cautious about China's inroads into South Asia, especially President Xi Jinping's signature "Belt and Road" trade and infrastructure initiative which includes projects that cross through Pakistan-occupied Kashmir.

BRICS Summit

"The Doklam stand off, when it comes to various multilateral arrangements the two sides are moving ahead regardless," Kantha said, noting Prime Minister Narendra Modi's trip to a China-hosted BRICS summit in September appears to be going ahead.

Partner countries -- particularly Asean nations -- will have to play a balancing role in the trade deal, said Sachin Chaturvedi, director general of the New Delhi-based Research and Information System for Developing Countries.

"India wants to be connected to the region economically but further polarization has happened with Asean nations tilting towards China," he said.




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