Indian PM Modi

RCEP deal delayed – India wants ‘CECA-like’ freer movement of labor with member countries

At the 35th ASEAN Business and Investment summit last Saturday (2 Nov), negotiators were still discussing to create the world’s largest regional trade pact, the Regional Comprehensive Economic Partnership (RCEP), after India made more last-minute requests, Bloomberg reported.

The RCEP is a proposed free trade agreement (FTA) between the ten member states of the ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) and its six FTA partners (China, Japan, India, South Korea, Australia and New Zealand). Negotiations for RCEP started in November 2012 and have been ongoing ever since.

Leaders attending the summit last Saturday were hoping to present a preliminary deal today (4 Nov), paving the way for countries to finalize details on the legal framework of an agreement that would cover one-third of the global economy. However, it was not meant to be due to some “last-minute requests” from “one country”.

Philippine Trade Minister Ramon Lopez told reporters that the one country – which he didn’t identify – wanted to “have confirmation before they can totally agree.” Bloomberg identified that country to be India. It appears discussions for RCEP will be continuing till next year before any deal can be agreed on.

At the summit, Indian PM Modi said his country wants to see greater ambition on services even as it remains “committed to a comprehensive and balanced outcome” from ongoing RCEP negotiations.

“We have put forward reasonable proposals in a clear manner and are engaged in negotiations with sincerity,” he said in an interview with the Bangkok Post. “We would like to see commensurate levels of ambition on services from many of our partners, even as we are ready to address their sensitivities.”

India has long pushed for other countries to allow greater movement of labor and services in return for opening its market of more than 1 billion people to certain goods.

In other words, India hopes to see similar CECA type of arrangements with Singapore happening with all the other RCEP member countries, with Indian labor easily obtaining work visas to work in those countries too.

Tharman: Wrong to have total free flow of people

With the signing of CECA between Singapore and India in 2005, Indian labor has been moving into Singapore ever since competing with Singaporeans for jobs. It led to more angry Singaporeans voting against the People’s Action Party (PAP) government at the 2011 GE, with the percentage votes of PAP dropped to the lowest in the history of Singapore.

The PAP government then began to throttle back by imposing a Fair Consideration Framework and introducing Jobs Bank to enable Singaporeans to be considered first for employment by companies. The government also started to be more restrictive in granting work passes for foreigners to work in Singapore.

This resulted in a backlash from the Indian government, accusing the Singapore government of violating the terms of CECA and threatening to bring Singapore to WTO court.

Two years ago, then Deputy Prime Minister Tharman explained Singapore’s position in India (‘Wrong to have total free flow of people: DPM Tharman‘, 23 Jul 2017). Speaking at the Delhi Economics Conclave organized by the Indian Finance Ministry, Tharman explained that Singapore has been one of the strongest advocates when it comes to the free flow of goods and services, but there must be limits to the movement of people.

Otherwise there will be less push for businesses to be more productive, and “more fundamentally, you become a society where people don’t feel it’s their own society”, he added. “This is a reality not just because of Trump in the US or Brexit in UK. It is a reality all over the world.”

Noting that a third of Singapore’s workforce is already made up of foreigners, he further commented, “It would be mindless to have an open border without any policy framework to govern and constrain the flow of people into your job market. It will not just be wrong politics but wrong economics.”

Singapore is India’s top investor

Thanks to CECA, Singapore became India’s top investor for the financial year from May 2015 to end April 2016, investing some US$14 billion in India. But not all investments in India were successful.

Last Wednesday (30 Oct), the Amaravati capital project was formally scrapped by the Andhra Pradesh government, terminating a development agreement with the Singapore consortium consisting of Temasek-linked companies (‘Indian state cancels agreement with Temasek-linked consortium to develop Amaravati capital‘).

MOU signing of Amaravati project in good times

According to an Indian news media, the Temasek-linked companies soon faced problems when the project was started. Some of the allotted land was stuck in an ecological-legal tangle as 170 out of 1,691 acres was right on the river bed. Since no development activity was permitted in that portion of land, as per River Conservation Act and also the National Green Tribunal orders, the Singapore consortium tried to seek alternative land. That meant changing the core capital Master Plan, which ran into complications with several central government agencies.

In any case, the whole project was finally cancelled by the Indian state government last week.