How RCEP negotiations hinge on a single phrase

NEW DELHI: A major Asian trading agreement scheduled to be completed by the year-end could be hanging on a single phrase, as India treads a fine line between an external pressure to complete negotiations and internal desire to continue talks until next year.

As the East Asia summit nears this week, negotiations for the RCEP (Regional Comprehensive Economic Partnership) are going down to the wire. With the next ministerial scheduled for November 13, Prime Minister Narendra Modi, who will have to take the final decision on India's negotiating stance, is involving himself more deeply, spending long hours with the Indian negotiators. Negotiators are holding last-minute discussions this weekend, working to a ministerial meeting on Monday, to be followed by the RCEP summit on Wednesday.

The most recent hiccup in the talks is the phrase "substantial conclusion". In the previous round of discussions in September, the countries had agreed to announce that they would declare that they had reached a "substantial conclusion" while continuing to fine-tune the negotiations before reaching a final agreement by 2019.

During the talks in Auckland last week, it quickly became clear that in certain countries like Malaysia, the phrase "substantial conclusion" had legal implications, which required the government to make the agreement details public to Parliament and media.

With elections due next year (in India, Indonesia, Thailand and Australia), the Modi government would like to ideally reveal the details after the polls, for fear of unintended consequences. Sources said after the Auckland meeting, India found a sympathetic ear from some other countries. In response, India has proposed using the term "substantial progress" at the next meeting to describe the state of the negotiations. In last week's negotiations, India said this would undermine the principle of "single undertaking", which means nothing is done until it is completely done. In addition, Indian officials say, only five of the 18 chapters in the RCEP are actually done, leaving the rest with many debating points.

Sources said Modi had directed that India should strive to stay in the deal. The RCEP is actually a trade agreement that covers almost all of the Indo-Pacific, a key focus of Indian foreign policy at this point. In addition, opening up these markets for Indian services, and goods, is equally important. Many countries want India to be part of this deal as a way of balancing China's outsized presence.

If the Indian formulation passes muster with the other members, India remains in the room. India is having a hard time battling perceptions that it is the only laggard on RCEP negotiations. In addition, the China bogey looms large in the Indian government - this is in danger of creating a kind of paralysing Sinophobia.

From a position of being fearful of letting the RCEP become a back door for Chinese entry into India, India has evolved its position considerably, now believing it has a lot to gain from the agreement. Sudhanshu Pandey, chief Indian negotiator was quoted as saying to a website, "We don't have any apprehensions on signing a free trade agreement. What we are looking for a very comprehensive, high ambition across all pillars, which means goods, services, and investment agreement."

Japan, Singapore, Australia and New Zealand are among the countries that would like to see an early conclusion of negotiations. A greater impetus is the ongoing trade war between the US and China that is sending jitters in the Asean region.