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RCEP - Aluminium and copper associations caution government on China’s presence

Metal News - Published on Wed, 22 May 2019

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Economic Times reported that ahead of a key meeting of senior trade officials of 16 Asia-Pacific countries, including India, later this week, aluminium and copper industry associations have raised concerns especially the likely rise in trade deficit with China due to “alarming" spike in imports and a potential threat to Make in India. Negotiators of the Regional Comprehensive Economic Partnership bloc will meet on May 24 in an inter-sessional meeting in a bid to conclude the mega trade agreement this year. RCEP is a regional trade agreement spanning the 10 Asean countries and the group’s six free-trade agreement partners Australia: New Zealand, Japan, China, South Korea and India. Though talks on seven of the sixteen chapters of the agreements are complete, the key areas of goods, services and investment are still being negotiated.

In the April to January period of 2018-19, India’s merchandise exports to the region were USD 55.3 billion while imports were USD 145.9 billion, leaving a trade deficit of USD 90.6 billion of which USD 53.4 billion was with China alone in the whole of FY19.

While the aluminium industry wants aluminum and its articles in the negative list or the exceptions to products they want to open up for imports under RCEP, the copper association has sought zero duty on copper ore and concentrate to prevent inverted duty structure.

China is the largest producer and exporter of aluminium products with surplus aluminium capacity of 11 million tonne and gives subsidies such as interest free and low cost loans, subsidized land to new smelter projects, income tax and VAT rebates, and transport subsidy to its industry.

Aluminium Association of India said in a representation to the government said that “The presence of China in RCEP is the biggest threat for Indian aluminium industry.”

India is the third largest aluminium producer globally after China and Russia. It said that despite having sufficient domestic capacity of 4.1 million tonne per annum, more than 55% of country’s demand is being met through imports, most of which is scrap. 2017-18 witnessed the highest ever aluminium imports of 1.96 million tonne resulting in forex outgo of USD 4.5 billion, according to the association. The industry also cautioned that the US-China trade war has prompted a dumping of surplus aluminium exports into India, which is reflected in the 21% increase in imports in Apr to Dec period in FY19 over FY18.

Citing a Niti Aayog study, the aluminium association said that India’s trade deficit with China for aluminum is around USD 690 million. It said that “If duty is further cut under RCEP, domestic aluminum industry will be severely hit.”

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Posted By : Rabi Wangkhem on Wed, 22 May 2019
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