India looks to cut tariff concessions on Chinese goods

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India is expected to push for a new approach to tariff cuts at the 16-country trade bloc to prevent China from flooding its market with cheap goods. The commerce department is working on ways to give minimum tariff concessions to Chinese goods and delay the concessions by a long number of years even as it allows imports from other member countries at lower duties.

As part of the Regional Comprehensive Economic Partnership (RCEP) trade negotiations, India is looking to treat Chinese products differently due to the burgeoning trade deficit it has with Beijing. In 2015-16, India’s exports to China were $9 billion while the imports were a staggering $61.7 billion leaving a trade deficit of $52.7 billion.
India hopes this longer phasing out of tariff concessions and differential treatment, called “deviations”, will become the basis for RCEP negotiations. The new approach comes ahead of the next ministerial meeting on November 3-4 in the Philippines.

Moreover, since India had to do away with a three-tier structure of differential duty cuts as part of the negotiations, deviations are the last ray of hope to contain the trade deficit with China under a formal trade agreement. In the earlier tiered structure, India had proposed to remove duties on 42.5% of the items traded with China, something that Beijing had termed as low.

“We hope the tiers come back from the backdoor through deviations,” said a commerce department official, adding that the difference in tariff cuts may not be as much as in the earlier structure of three tiers.

“We can look at longer staging periods for China by delaying the concessions by some years or not offer key products for tariff cuts to them at all,” the official said. Despite agreeing to a common concession, India is insisting on a single undertaking for the RCEP which means nothing is agreed until everything is agreed. “With single undertaking, we can be sure other members will not lose interest in India’s demands once we accept their demands for tariff concessions on goods,” the official said.

Trade Openness

Our problem with China seems to be a lack of trade access. And to better manage our trade deficit with China, we need to call for better trade access rather than opt to keep tariff barriers high. The latter option would only raise transactions costs and lead to thoroughly suboptimal policy going forward. are definite gains from trade and openness


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