Kochi: The Regional Comprehensive Economic Partnership (RC-EP) agreement to be signed with the ASEAN countries will badly impact the plantation commodities, it is feared.
According to an analysis by the United Planters’ Association of South India, pepper, coffee and tea will be the worst hit by the trade pact. AL.RM.Nagappan, president, UPASI, has expressed concern on the RCEP negotiation which is currently underway. UPASI fears that any further reduction in the import tariff would severely affect the price realisation of plantation commodities, putting the plantation sector in further trouble.
As per UPASI analysis, during 2018-19, the trade deficit in the plantation commodities is minus Rs 5,716.64 crore with RCEP countries, while we had an overall trade surplus in the plantation commodities to the tune of Rs 4,368 crore. This indicates that plantation commodities will be losing significantly if the RCEP agreement materialises and we fear that further reduction in tariff can only worsen the trade deficit in the plantation commodities and will make things miserable for the sector. It is already facing challenging times on account of low prices vis-à-vis high cost of production, he said.
Plantation commodities like tea, coffee, natural rubber, cardamom and pepper were exposed to international competition since April 2001, when the quantitative restriction was lifted as per the commitments under WTO. The signing of the ASEAN Agreement in 2009 further opened up the Indian market to the plantation producing countries like Indonesia, Vietnam, Malaysia, Thailand etc. Under the ASEAN Agreement, the import duties were gradually reduced since 2009 for tea, coffee and pepper while natural rubber, cardamom and a 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 percent under WTO for other countries) and 51 per cent for pepper (70 percent under WT0), he said.
Among the five plantation commodities, natural rubber and pepper have an overall trade deficit, irrespective of RCEP. High trade deficit in natural rubber suggest the wrong classification of NR as industrial raw material and thereby lower bound duty fixed at 25 percent, which aided largescale imports. This is despite NR being kept under exclusion list under ASEAN Agreement. In pepper, due to multiple bilateral [Indo-Sri Lanka] and multilateral trade agreements [SAARC, SAFTA & ASEAN], the trade deficit had increased over the years. The trade deficit with RCEP countries is minus Rs 415.31 crore during 2018-19.
Coffee being an export dominated commodity with over 75 per cent being exported, India has an overall trade surplus of Rs 4,763.4 crore, but we have trade deficit with RCEP countries at minus Rs 164.35 crore, suggesting Indian coffee sector will be a loser, he said.
