After agreeing to forgo its own proposal of a three-tier system of tariff concessions to member states under the ongoing negotiations for the Regional Comprehensive Economic Partnership (RCEP) trade agreement at the Laos ministerial in August, India is again set to play hardball on services negotiations at the upcoming RCEP ministerial at Cebu in the Philippines starting Thursday.

“The Asean (Association of Southeast Asian Nations) grouping led by Singapore remains inflexible when it comes to services negotiations. We are going to tell the RCEP member countries that we will reveal details of our approach in goods negotiations once other members show progress in services negotiations,” a commerce ministry official said, speaking on condition of anonymity.

Earlier, India proposed a three-tier tariff reduction plan, depending on whether it has a free trade agreement with the member country or not. Under the plan, it proposed 80% tariff cuts to the 10 Asean countries, 65% to South Korea and Japan and 42.5% tariff liberalization to China, Australia and New Zealand, with which it does not have free trade agreements.

However, it buckled under pressure from other members and agreed to provide similar tariff cuts to all RCEP member states with limited deviation at the Laos ministerial.

India faces a serious threat of cheap imports from China, with which it already shares a trade deficit of over $50 billion. India plans to raise its earlier offer of tariff elimination on 42.5% traded goods with China but well below what it would offer to other member countries. But it also plans to stagger the phase-out of tariffs over a longer period in the case of China, to allow Indian industry more time to adjust.

“We are also exploring whether we could offer similar tariff cuts to all other member countries except China. However, a final call on this is yet to be taken,” the official said.

On Singapore blocking any substantial negotiation in services where India has an upper hand, the official said Singapore may be a city-state but it cannot equate itself with countries like Thailand which may be ready to give more market access. The Asean is represented as one member in the RCEP negotiations, thus limiting India’s negotiating manoeuvrability with the 10 Asean members with diverse market sizes.

The official said India will also insist on completing RCEP negotiations under a single undertaking where all elements of the negotiations like goods, services and investment form part of the final agreement. “Other member countries were not explicitly stating that they are in favour of single undertaking in the last ministerial,” he added.

On investment negotiations, the official said India has refused to negotiate on the investor to state dispute settlement mechanism clause under RCEP, as part of which an aggrieved investor can drag the government to arbitration if it is affected by any policy changes even though they may be in public interest.

“Not only India, even Asean countries are against this provision,” the official said.

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).

The grouping envisages regional economic integration, leading to the creation of the largest regional trading bloc in the world, accounting for nearly 45% of the world’s population and with a combined gross domestic product of $21.3 trillion.

The regional economic pact aims to cover trade in goods and services, investment, economic and technical cooperation, competition and intellectual property.

India’s interests lie mostly in services, the removal of technical barriers to trade such as those taken under sanitary and phyto-sanitary measures, and trade in goods such as pharma and textiles.