[Editorial Analysis] Stay with RCEP

Mains Paper: 2 | International Relations

Prelims level:  RCEP

Mains level: India must not take the easiest way out on the trade deal and walk out of talks



• Negotiations on the Regional Comprehensive Economic Partnership, among 16 Asian and Pacific Ocean countries, have entered a decisive phase.

• Most potential member-countries of the grouping, that comprises the 10 ASEAN members and their Free Trade Agreement partners, Australia, China, India, Japan, New Zealand and the Republic of Korea, would like to see a “substantive agreement” on the trade deal by the end of this year.

• The countries which still have issues with the outline of the agreements reached so far may be told politely to step aside and allow a smaller group to go ahead with finalising the RCEP, with the option to join it at a later date.

• India is among the countries that will have to take a call at this point.

• The government’s decision to set up a group of four ministers to advise Prime Minister Narendra Modi on the path ahead indicates the seriousness of the situation.

Concern for India

• India’s concerns with RCEP negotiations thus far are manifold, but some have been addressed.

• The first is the greater access Chinese goods will have to the Indian market, a problem given India’s massive trade deficit.

• To circumvent this, given that India is the one country that doesn’t have an FTA with China, the government has proposed a “differential market access” strategy for China, which others are inclined to accept.

• After the Wuhan summit, India and China have made progress on addressing the trade deficit, with China increasing access for Indian goods such as pharma and agricultural products.

• The second concern is about demands by other RCEP countries for lower customs duties on a number of products and greater access to the market than India has been willing to provide.

• On the other hand, the more developed RCEP countries such as Australia and Singapore have been unwilling to accommodate India’s demands to liberalise their services regime and allow freer mobility of Indian workers.


• Naturally, none of this is made easier by the fact that some of the RCEP countries, including India.

• Despite these concerns, the government must take into account the deeper strategic pitfalls of either slowing down India’s RCEP engagement or walking out of the talks at this stage.

• Doing so would cut India out of the rules-making process for the RCEP and give China further space in the regional trade and security architecture.

• When the U.S. has broken from the global concord on multilateral trade agreements, an Indian walkout would endanger the united message that RCEP countries, which represent 40% of the global GDP, would wish to send out.

• It would also be a sharp departure from India’s “Act East” slogan and its extended outreach to ASEAN.

Link – https://tt93a.app.goo.gl/G76fJBAz2mM7pYdw5

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