RCEP+consultation+Chennai+28+9+15.compressed (1)

REGIONAL COMPREHENSIVE

ECONOMIC PARTNERSHIP

(RCEP) CONSULTATIONS

Chennai 28 September, 2015

REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP (RCEP)

16 countries. 10 ASEAN member states (Indonesia, Malaysia,

Philippines, Singapore, Thailand, Brunei Darussalam, Vietnam, Lao PDR, Myanmar and Cambodia); and

ASEAN’s six FTA partners (Australia, China, India, Japan, South Korea and New Zealand).

Market size: 3.4 billion or 49 % of world’s population (Source: Asian Development Bank Outlook, 2013)

Economic size (GDP): $ 22.5 trillion or 29% of world share (Source: 2014 World Bank GDP)

Merchandise Trade: $ 10.8 trillion or 28.3% world share (Source: 2014 WTO statistics)

Commercial Services: $ 2.2 trillion or 23% world share (Source: 2014 WTO statistics)

GENESIS OF RCEP

Impasse at the WTO’s Doha Round of negotiations

Efforts by developed countries (mainly the EU and US) to create a new trade architecture.

US led Trans Pacific Partnership (TPP) on the Western Flank

Trans Atlantic Trade and Investment Partnership (TTIP) on the Central Flank.

Need for a Eastern Flank and RCEP fits this bill.

CONFIGURATION OF COUNTRIES

WTO (160)

TTIP (29) US TPP (12)

RCEP (16)

COMPARISON OF RCEP AND 2 OTHER MEGA FTAS

Mega FTA Countries Merchandise

trade (% share 2014)

Commercial Services (% share 2014)

GDP constant prices (% share 2014)

RCEP 10 ASEAN countries and 6 FTA partners (Australia, China, India, Japan, Korea, New Zealand)

28.3% 23.0% 29.0%

TPP (Trans Pacific

Partnership)

Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, US, Vietnam

22.4% 22.9% 34.2%

TTIP (Trans Atlantic Trade &

Investment Partnership)

European Union and United States 42.9% 52.7% 43.4%

GUIDING PRINCIPLES & OBJECTIVES OF RCEP RCEP will cover

trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement and other issues.

Taking into consideration the different levels of development

of the participating countries, the RCEP will include appropriate forms of flexibility including provision for special and differential treatmentt

RCEP will have broader and deeper engagement with

significant improvements over the existing ASEAN+1 FTAs while recognizing the individual and diverse circumstances of the participating countries.

REASONS FOR INDIA’S PARTICIPATION IN

RCEP

Look East/ Act East policy. Changing geo-economic and geo political landscape: RCEP

would be a major trade block on the eastern flank

Mega trade agreements like TPP and TTIP Rising importance of Global and Regional Value Chains. RCEP could potentially transform the region into an

integrated market. India cannot afford to be left out of this new economic architecture emerging in our region

RCEP STATE OF PLAY (AS OF SEPTEMBER, 2015)

Nine round of negotiations One inter-sessional Ministerial on 13 July, 2015 3rd RCEP Ministerial on 24 August, 2015 Outcome as of September, 2015

Tariff modalities: thresholds for initial offers on goods decided in the 3rd RCEP Ministerial

Rules of Origin: Slow but steady progress on product specific rules of origin (PSRs)

Services: initial offers made by all countries but the discussions are centred on the value added elements (transparency list, MFN and ratchet)

Investment: initial reservation lists (IRL) submitted by all RCEP countries except China and India

TARIFF MODALITIES – INITIAL OFFER

3 tier threshold 1st tier for ASEAN 2nd tier for ASEAN FTA Partners (AFPs) with

existing FTAs (in case of India, this could include Japan and Korea)

3rd tier for AFPs with no existing FTA (in case of India, this includes Australia, China and New Zealand)

Threshold includes both % of total tariff lines % of total RCEP imports

Common concession in each tier

THRESHOLDS IN 3 TIERS

1st tier: 65% entry into force + 15% over 10 years

2nd tier: 80% threshold with a carve out for India of 65%

3 tier: sub categories as under: 72.5% as general (Japan, New Zealand) 62.5% for Korea 52.5% for China 42.5% for India with China offering 42.5% on a

reciprocal basis and New Zealand offering 62.5%

PARAMETERS OF INITIAL OFFERS

Base rate of MFN rates as of 1.1.2014 Import value is the average imports of 2012

and 2013 Nomenclature in HS 2012 Bilateral thresholds could be considered in the

working group on trade in goods (WGTIG)

POSSIBLE CRITERIA FOR INITIAL OFFERS

1st tier (for ASEAN) Possible Criteria for additional lines over existing

FTA MFN rates Elimination list of existing FTAs Stakeholder sensitive lines

2nd tier (for AFPs with existing FTAs) Possible criteria for additional lines over existing

FTA Elimination list in the existing FTAs Stakeholder sensitive lines

POSSIBLE CRITERIA FOR INITIAL OFFERS

3rd tier (for AFPs with no existing FTAs): Possible Criteria Tariff elimination in existing FTAs MFN duty/ zero duty lines Import value from 3rd tier countries RCEP import value Stakeholder sensitivity

THE CHINA FACTOR?

Whether China is graduating to the upper end of the value chain/ high value branded products?

What are the surplus capacities in China? Does a 7.5%-10% customs duty really affect

China’s capacity to export? Do we want a low ambition from China

thereby denying us market access into China? Complaints that an ambitious China-ASEAN

FTA has affected our exports to ASEAN Recent developments (exchange rate)

CHINA – MOVING UP THE VALUE CHAIN

KPMG Global Manufacturing Outlook 2012: "Our view is that we will see significant investment in high-value manufacturing for traditional industries and for government-backed investments in advanced technology industries.“

Ernst & Young Rapid Growth Markets Forecast 2013: China’s 12th five-year plan (2011 to 2015) aims to shift economic growth toward consumption and away from low value-added manufacturing exports.

CNBC report (June, 2015) of China rushing to escape the low value added manufacturing trap

The "Made in China 2025" program, announced during a major government meeting in February, proposes to restart a move up the value chain -----------.”The initiative designates 10 industries, including robotics, medicine and advanced materials as targets for investment and policy support.

CHINA TRADE WITH ASEAN (2012-14 AVERAGE IN $ BILLION)

Sector Imports Exports

Chemicals 21.3 21.2

Gems and Jewellery 5.1 0.8

Machinery 90.2 80.8

Minerals 35.8 10

Petroleum products 25.8 9.6

Plastics 9.5 7.1

Rubber 10.8 1.1

YUAN AND RUPEE VARIATIONS

MARINE PRODUCTS– EXPORT INTEREST

HS Code Description MFN Duty

New Zealand 03.06.27.19 Whole, cooked shrimps and prawns 5% 03.08.19.90 Sea cucumbers (other than live, fresh, chilled) 5% 03.08.90.90 Other acquatic invertebrates (other than crustaceans and molluscs) 5%

China 3028990 Fresh or chilled fish, nes 12% 3032600 Frozen eels 12% 3033300 Frozen sole 12% 3033900 Frozen flat fish (excl. halibut, plaice & sole) 10% 3038910 Frozen scabber fish (trichurius) 10% 3038920 Frozen yellow croaker(pseudosicaena) 10% 3038930 Frozen tilapia 10% 3038990 Frozen fish, nes 10% 3049900 Other fish meat, frozen 10%

MARINE PRODUCTS– EXPORT INTEREST

HS Code Description MFN Duty

China 3061711 Frozen shelled shrimps 8% 3061719 Frozen other shrimps 5% 3061721 Frozen shelled prawns 8% 3061729 Frozen other prawns 5% 3062190 Not frozen rock lobster and other sea crawfish, nes 15% 3062492 Unfrozen swimming crabs 14% 3062499 Unfrozen crabs, nes 14% 3074900 Cuttle fish & squid, frozen, dried, saltd or in brine 12% 3075900 Octopus,frozen, dried, salted or in brine 17% 3077910 Clams, frozen, dried, salted or in brine 10% 3079190 Other molluscs, live, fresh or chilled 14% 16041400 Prepared or preserved tunas, skipjack and bonito (excl. minced) 5% 16042099 Other prepared or preserved fish 12%

PROCESSED FOOD– EXPORT INTEREST HS Code Description MFN Duty

China 7123990 Other dried mushroom and truffles 13% 7129099 Dried vegetables, nes 13% 7139090 Dried leguminous vegetables, shelled, nes 7% 8023200 Walnuts without shells, fresh or dried 20% 8061000 Fresh grapes 13%

9023090 Other black tea & partly fermented tea nes, in packings≤3kg 15%

9024090 Other black tea & partly fermented tea nes, in packings > 3kg 15%

9041100 Dried pepper (excl. crushed or ground) 20% 9041200 Pepper, crushed or ground 20% 9042100 Fruits of genus Capsicm or Pimenta, dried 20% 9042200 Fruits of genus Capsicm or Pimenta, crushed or ground 20% 9041100 Dried pepper (excl. crushed or ground) 20%

PROCESSED FOOD– EXPORT INTEREST HS Code Description MFN Duty

China 9103000 Turmeric (curcuma) 15% 9109100 Spice mixtures 15% 9109900 Other spices, nes 15%

12024200 Ground-nuts, not roasted or otherwise cooked, shelled, whether or not broken 15%

12040000 Linseed 15% 12074090 Sesamum seeds excl for sowing 10%

13021990 Vegetable saps and extracts,nes, used in pesticide 20% 13023200 Mucilages&thickeners from locust beans/guar seeds 15% 15081000 Crude ground-nut oil 10% 15119020 Palm stearin 8% 15153000 Castor oil & its fractions 10%

PLASTICS– EXPORT INTEREST

HS Code Description Duty

Australia 3906.90.00 Acrylic polymers in primary forms (excl. polymethyl methacrylate) 5%

3909.50.10

Polyurethanes, in primary forms, as follows: addition products of polyester or polyether polyols (see HTISC 3909501031) and goods put up in sets consisting of two or more separate constituents which, when mixed together, form a polyurethane 5%

3912.90.00 Cellulose and its chemical derivatives nes, in primary forms 5%

3917.23.00 Rigid tubes, pipes and hoses of polymers of vinyl chloride 5%

3917.39.90

Tubes, pipes & hoses of other plastics (excl. rigid; of a kind used as rep-lacement comp. in pmv; flex. ones having a min burst press. of 27.6 mpa & not reinforc. or otherwise comb. with other materials, with or without fittings). 5%

3917.40.00 Plastic fittings for tubes, pipes and hoses 5%

3920.20.00

Plates, sheets, film, foil and strip nes, of polymers of propylene, non-cellular and not reinforced, laminated, supported or similarly combined with other materials (excl. goods of 3006.10) 5%

3920.62.00 Coated and uncoated copying, drafting or metallised film, of poly(ethylene terephthalate) (excl. HS 3918 & HS 3919) 5%

PLASTICS– EXPORT INTEREST

HS Code Description Duty

China 39012000 Polyethylene having a specific gravity≥0.94, in primary forms 6.5% 39021000 Polypropylene, in primary forms 6.5%

39159010 Waste parings and scrap of pdyethylene glycol tevephthalate 6.5%

39206200 Plate/foil/strip/sheet/film of PET, not reinforced, laminated, supported or combined with other materials, non-cellular 6.5%

39219090 Other plates, strips, sheet, film of plastics, nes 6.5% New Zealand

3907.91.09 – – – Other unsaturated polyesters 5% 3909.50.09 – – Other polyurethanes 5% 3917.21.00 Tubes, pipes, hoses of polymers of ethylene 5%

3917.23.00 Tubes, pipes, hoses of polymers of vinyl chloride 5%

3917.29.29 Tubes, pipes, hoses of other plastics 5%

LEATHER– EXPORT INTEREST HS Code Description Duty

China

41071210

Leather further prepared after tanning or crusting, including parchment-dressed leather, of bovine (including buffalo) animals, without hair on, other than leather of heading 41.14, whole hides and skins, grain splits 8%

41131000

Leather further prepared after tanning or crusting, including parchment-dressed leather, of goats or kids, without wool or hair on, whether or not split, other than leather of heading 41.14 14%

42031000 Articles of apparel of leather, of leather or of composition leather 10%

42021290 Vanity-cases, executive-cases, brief-cases, school satchels and similar containers nes, with outer surface of plastics /textile materials 20%

New Zealand 41.14.20.19 -- Metallised leather 5%

42.01.00.00

Saddlery and harness for any animal (including traces, leads, knee pads, muzzles, saddle cloths, saddle bags, dog coats and the like), of any material

5%

42.02.11.00 -- With outer surface of leather or of composition leather 5%

42.02.12.00 -- With outer surface of plastics or of textile materials 5%

FOOTWEAR– EXPORT INTEREST HS Code Description Duty

China

64029921 Footwear, nes, with plastic uppers and woven fabrics or other textile products as substrate, not covering the ankle 24%

64029929 Footwear, nes, with plastic uppers, not covering the ankle, of rubber or plastics 24%

64039119 footwear covering the ankle,but no part of the calf 10% 64039900 Footwear with rubber... soles, leather uppers, not coverng the ankle 10% 64041900 Other footwear, with rubber or plastic soles & textile uppers 24%

New Zealand 64.02.19.19 --- Other sizes 10% 64.02.99.19 --- Other sizes 10%

64.03.20.19 -- Other sizes 10%

64.03.40.09 other footwear with protective metal caps 10%

64.03.91.19 Other footwear with plastics and synthetic soles 10%

64.03.99.19 --- Other sizes 10%

TEXTILES-POSSIBLE EXPORT INTEREST Australia

Unbleached/ bleached/ dyed woven fabrics<85% SF Twine of polypropylene/ polyethylene Floor coverings of wool/ animal hair/ manmade textiles

China Uncombed single cotton yarn>85% cotton Denim >85% cotton > 200g/m2

Woven fabrics < 85% PSF

New Zealand Wool Fabrics Fabrics of pile construction > 85% wool SSF Fabrics > 85% SSF

Korea Unbleached or not mercerised cotton yarn < 85% wt of cotton

Malaysia Cotton yarn > 85% cotton KC pile fabrics

Thailand ,dyed/ printed woven fabrics>85% wt of texturised polyester filaments

Vietnam: woven fabrics of SSP < 85% wt mixed with cotton < 170g/m2

CLOTHING-POSSIBLE EXPORT INTEREST

Australia KC women’s dresses/ trousers; T-shirts/ baby garments NKC women’s dresses/ skirts/. Blouses; men’s shirts of cotton

Bed/ table./ kitchen/ toilet linen

China KC -T shirts/ baby garments NKC- men’s trousers/ shirts

New Zealand NKC- women’s suits/ ensembles, jackets, housecoats of synthetic fibres NKC- women’s shirts/ blouses/ shirt blouses

Malaysia NKC – women’s dresses/ trousers NKC – bed linen of other textile materials

Thailand NKC- jerseys, pullovers of cotton/ man made fibres ,KC-women’s blouses, shirt of cotton/ other textile materials

IRON & STEEL -POSSIBLE EXPORT INTEREST Australia

Other bars and rods of stainless steel Tubes, pipes, containers Towers and lattice masts

China Other tubes, pipes and hollow profiles

New Zealand Stranded wire, screws, bolts Household articles

Malaysia Flat rolled products Angles, shapes and sections Screws, bolts and nuts

Thailand Flat rolled products of iron, non alloy steel and stainless steel Bars, rods and wires of stainless steel Tube, pipes, hollow profiles, screws,

Vietnam: Flat rolled products of iron, non alloy steel and stainless steel

MECHANICAL MACHINERY-POSSIBLE EXPORT INTEREST

Australia Pumps for liquids Filtering/ purifying/ boring/ sinking machinery Gears/ gearing/ bearing houses/ tapered roller bearings

China Engines and motors Centrifuges/ heat exchange units

New Zealand Vapour generating boilers Other machine tools

Malaysia Tower cranes Graders, levellers, bulldozers

Vietnam IC engines Pumps Pressure reducing valves

ELECTRICAL MACHINERY– EXPORT INTEREST HS Code Description

New Zealand

8501.61.00 Alternators of an output <75 kVA

8504.40.90 Other static converters

8504.90.29 Parts of transformers, statics converters, inductors

8516.80.00 Electric heating resistors

8535.21.00 Automatic circuit breakers for voltage>1KV,<72.5 kV

8536.20.00 Automatic circuit breakers for voltage < 1kv

8536.49.00 Other relays

8536.69.00 Other lamp holders, plugs, sockets

8536.90.00 Other electrical apparatus

8537.10.00 Boards, panels, consoles for voltage <1,000 V

8538.90.09 –Other electrical parts

AUTO COMPONENTS – EXPORT INTEREST HS Code Description MFN duty

Australia

8708.30.99

Brakes and servo-brakes and parts thereof, other than those used as components in passenger motor vehicles (incl. brake master cylinders, wheel cylinders and disc brakes)

5.0%

8708.80.99

Suspension shock-absorbers (excl. for tractors of 8701.10.00, 8701.30.00, 8701.91.01 and 8701.90.90 and of a kind used as components in passenger motor vehicles)

5.0%

8708.91.33 Radiators, of a kind used as components in passenger motor vehicles 5.0%

8708.99.99

Parts & accessories nes of the motor vehicles of 8701 to 8705 (excl bumpers/seat belts/brakes/gear boxes/axles/road wheels/shock-absorbers/radiators/exhaust pipes/clutches/steering equi/chassis and of a kind used as components for PMV's

5.0%

China 87087090 Road wheel & parts of other vehicles of 87.02 to 87.04 10.0%

Thailand 87084090 - - Parts of gear boxes

87085011 - - Drive axles For vehicles of heading 87.03

87089510 - - - Safety airbags with inflater system

87149100 - - Other parts of motorcycles

SPECIFIC INPUTS SOUGHT

HS 8 digit line of India which is sensitive and to be kept outside the initial offer (with reasons thereof such as domestic production, capacity utilisation, employment, investments, competitors and their unit prices etc)

HS national line level of the RCEP country on which export interest exists: For example HS35079090 of China (enzymes and

prepared enzymes)