The proposed Regional Comprehensive Economic Partnership (RCEP) will harm and worsen the trade deficit in the plantation commodities and make things miserable for the sector, which is already facing challenging times on account of low prices and high cost of production, says a study by the United Planters’ Association of Southern India (UPASI) , an apex body of planters.
Natural Rubber (NR), pepper, coffee and tea are likely to come under intense competition and imports into the country are likely to increase over time, the study said.
The trade partnership of RCEP is expected to be the world’s largest regional trading bloc, with nearly 45 per cent of global population and combined gross domestic product of $21.3 trillion. RCEP includes the 10 members of the ASEAN grouping of Southeast Asian nations and six Asia-Pacific countries of China, India, Japan, South Korea, Australia and New Zealand.
UPASI reports that the plantation commodities like tea, coffee, natural rubber, cardamom, pepper were exposed to international competition from April 2001, when the quantitative restriction were lifted as per the commitments under WTO. The signing of the ASEAN Agreement in 2009 opened up the Indian market further to the plantation producing countries like Indonesia, Vietnam, Malaysia, Thailand, among others.
Under the ASEAN Agreement, the import duties were gradually reduced since 2009 for tea, coffee and pepper, while natural rubber, cardamom and few tariff lines on coffee were kept under exclusion list. The current import tariff for ASEAN countries is 50 per cent for tea and coffee (100 per cent under WTO for other countries) and 51 per cent for pepper (70 per cent under WTO).
“During 2018-19, the trade deficit in the plantation commodities is Rs 5,716.64 crore with RCEP countries, while we had overall trade surplus in the plantation commodities to the tune of Rs 4,368 crore. As per the analysis done by UPASI, the plantation commodities will be losing significantly if the RCEP agreement materialises,” UPASI secretary R Sanjith told Financial Express.
UPASI hopes that the plantation commodities will be kept under the exclusion list under the proposed RCEP. Removal of trade tariffs only enhances the price competitiveness by reducing the wages for the laborers or removal of laborers with increased automation, and also less or no return for the farmers.