India will not join RCEP trade deal in blow to sprawling Asian pact

India's Prime Minister Narendra Modi shakes hands with China's Premier Li Keqiang. (AFP)
Updated 04 November 2019

India will not join RCEP trade deal in blow to sprawling Asian pact

  • India dug in over concerns about market access, fearing its domestic industries would be hit hard if the country was flooded by cheap Made-in-China goods

BANGKOK: India said Monday it would not join a sprawling Asian trade pact, dealing a blow to the China-backed deal at the end of a Bangkok summit held against a backdrop of global growth fears.
The Regional Comprehensive Economic Partnership (RCEP) was meant to account for 30 percent of global GDP and loop in half of the world’s people.
But India dug in over concerns about market access, fearing its domestic industries would be hit hard if the country was flooded by cheap Made-in-China goods.
“We have conveyed to the participating countries that we will not be joining the RCEP,” Vijay Thakur Singh, a senior diplomat in charge of East Asia for India’s foreign ministry, told reporters.
“Our decision was guided by the impact this agreement will have on the ordinary human beings of India and livelihood of people, including the poorest of the poor,” she said.
The 11th-hour pullout comes after days of late-running negotiations at the Association of Southeast Asian Nations (ASEAN) summit, which closed Monday.
The meeting was dominated by trade issues — with RCEP front and center — backlit by the crippling US-China tariff war.
India’s decision is seen as a blow to the deal, which now includes all 10 ASEAN states plus China, Japan, South Korea, Australia and New Zealand — notably excluding the United States.
The remaining members are aiming to sign it next year after reviewing an agreed draft text.
The news came after a full day of meetings at the summit, attended by the leaders of Japan, South Korea, and India, along with China’s premier.
Some leaders pushed back against protectionism amid fears Trump’s trade war with China could slow global growth to the lowest rate in a decade, according to an International Monetary Fund prediction.
“We need to protect the free-trade order... and bring the global economy back on track,” said South Korean leader Moon Jae-in.
The US-China spat has seen the two sides swap tariffs on billions of dollars worth of goods, though they have agreed to roll back some of the measures with a “first phase” deal that could be soon signed.
Notably absent from the Bangkok talks were any top US officials — Washington sent Commerce Secretary Wilbur Ross and National Security Adviser Robert O’Brien in lieu of President Donald Trump.
That decision raised diplomatic eyebrows and appeared to prompt several Southeast Asian leaders to skip a meeting with US officials on Monday.
Just three leaders from the 10-member ASEAN bloc showed up to the session, along with a host of foreign ministers.
But O’Brien, Trump’s special envoy to ASEAN, shrugged off the apparent snub, describing “excellent conversations” with leaders.
“I was treated generously,” he told reporters.
O’Brien earlier read a letter from Trump inviting “the leaders of ASEAN to join me in the United States for a special summit” in the first three months of next year.
Trump attended the 2017 summit in Singapore and Vice President Mike Pence attended last year’s event in Manila.
But the Republican president could not come this year because he was busy with campaign events back home, a senior White House official said.
Trump’s administration is accused of retreating from Asia after he pulled out of the Trans-Pacific Partnership (TPP) — slated to be the world’s largest trade pact before the withdrawal.
The US leader has said he wants to pursue bilateral agreements over free trade accords to narrow trade gaps in the region — part of his “America First” clarion call.
Thailand handed over the ASEAN chair to Vietnam, where the RCEP deal could finally be signed, after years of gruelling negotiations.
A senior trade diplomat with knowledge of the negotiations said Indian Prime Minister Narendra Modi did not budge because he was under domestic pressure.
But the source held out the option that New Delhi could join at a “later date” even after it is signed — if outstanding issues are resolved.
China’s deputy foreign minister Le Yucheng echoed the view.
“Whenever India is ready, it is welcome to get on board,” he said before Delhi confirmed its pullout.
Analyst Deborah Elms said the deal shows a commitment to “stabilising trade in the region at a time of growing uncertainty.”
But “India will never get a better deal from the members than what they have already managed,” said Elms, director of the Asian Trade Center.

OPEC sees small 2020 oil deficit even before latest supply cut

Updated 12 December 2019

OPEC sees small 2020 oil deficit even before latest supply cut

  • OPEC keeps its 2020 economic and oil demand growth forecasts steady and is more upbeat about the outlook

LONDON: OPEC on Wednesday pointed to a small deficit in the oil market next year due to restraint by Saudi Arabia even before the latest supply pact with other producers takes effect, suggesting a tighter market than previously thought.

In a monthly report, OPEC said demand for its crude will average 29.58 million barrels per day (bpd) next year. OPEC pumped less oil in November than the average 2020 requirement, having in previous months supplied more.

The report retreats further from OPEC’s initial projection of a 2020 supply glut as output from rival producers such as US shale has grown more slowly than expected. This will give a tailwind to efforts by OPEC and partners led by Russia to support the market next year.

OPEC kept its 2020 economic and oil demand growth forecasts steady and was more upbeat about the outlook.

“On the positive side, the global trade slowdown has likely bottomed out, and now the negative trend in industrial production seen in 2019 is expected to reverse in 2020,” the report said.

Oil prices were steady after the report’s release, trading near $64 a barrel, below the level some OPEC officials have said
they favor.

The Organization of the Petroleum Exporting Countries, Russia and other producers, a group known as OPEC+, have since Jan. 1 implemented a deal to cut output by 1.2 million bpd to support the market. At meetings last week, OPEC+ agreed to a further cut of 500,000 bpd from Jan. 1 2020.

The report showed OPEC production falling even before the new deal takes effect.

In November, OPEC output fell by 193,000 bpd to 29.55 million bpd, according to figures the group collects from secondary sources, as Saudi Arabia cut supply.

Saudi Arabia told OPEC it made an even bigger cut in supply of over 400,000 bpd last month. The Kingdom had boosted production in October after attacks on its oil facilities in September briefly more than halved output.

The November production rate suggests there would be a 2020 deficit of 30,000 bpd if OPEC kept pumping the same amount and other factors remained equal, less than the 70,000 bpd surplus implied in November’s report and an excess of over 500,000 bpd seen in July. OPEC and its partners have been limiting supply since 2017, helping to revive prices by clearing a glut that built up in 2014 to 2016. But higher prices have also boosted US shale and other rival supplies.

In the report, OPEC said non-OPEC supply will grow by 2.17 million bpd in 2020, unchanged from the previous forecast but 270,000 less than initially thought in July as shale has not grown as quickly as first thought.

“In 2020, non-OPEC supply is expected to see a continued slowdown in growth on the back of decreased investment and lower drilling activities in US tight oil,” OPEC said, using another term for shale.