China, Japan Demand Low Tariff from India in ASEAN + Talk

India faces pressure to increase its tariff liberalzation proposal in the next round of negotiation in Auckland between 12-18 June.

Japan and China are pushing for either common tariff for all member countries in 10 years’ time or to make the initial tariff liberalization more ambitious.

China, Japan, Australia and New Zealand on the level of ambition submitted Papers in RCEP (ASEAN+) Talk.

Japan is saying as we progress, in 10 years’ time, there should not be any deviation and there should be common concessions. Other countries want to increase the ambition level but retain the principle of deviation. China is saying limited deviation should be allowed but with a 20-year phase-out period for 80-85% tariff liberalization.

India at present has proposed to follow a three-pronged strategy. One set is for its free trade partners, another for the Association of Southeast Asian Nations (Asean), Japan and South Korea for a third set.

In tier-I, which includes the members of Asean countries, India has offered 80% tariff liberalization with 65% elimination of tariff will come into force immediately and another 15% tariff elimination will happen over a period of 10 years.

In tier-II, India has offered a 65% tariff elimination to South Korea and Japan with whom it has FTAs, while these two countries will give 80% tariff elimination.

In tier-III, India will offer 42.5% to China, Australia and New Zealand, while demanding India 42.5%, 80% and 65%, respectively.

While India is insisting on a change of product classification plus 40% value addition as a criteria in deciding whether a product is produced in a country or not, other countries are asking for lower value addition limits and either change in product classification or value addition as a criteria.

Started in May 2013, RCEP comprises the 10 economies of the Asean region (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and six of its free trade partners (Australia, China, India, Japan, New Zealand and South Korea).