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RCEP members near agreement

Discussions on the proposed Regional Comprehensive Economic Partnership (RCEP) are proceeding more or less smoothly. Despite treading diametrically opposite paths on tariffs and market access, India and China, along with other nations, have hit it off on points regarding investment norms. The RCEP is a proposed pact between 10 Asean economies and six other nations (New Zealand, Australia, China, India, Japan and South Korea).

Most nations have agreed to ease the investor-state-dispute settlement (ISDS) clauses. These refer to a broad range of legal and policy norms regulating the process by which an investing private entity from another nation may seek legal recourse in the event of a dispute with the state. India also secured a commitment that ISDS will also not be valid on prohibition of performance requirements that deals with technology transfer and royalty payments.

India is cautious with regard to any measure that allows the aggrieved party to approach an international tribunal of law due to bad experiences earlier. Back in 2012, international investors in telecom companies, whose operational permits were cancelled by the Supreme Court in the wake of the 2G scam, had approached an international tribunal and sued the country for damages. While India avoided paying significant charges, the episode dented the country’s reputation as an investment destination.