RCEP

After eight years of negotiations, 15 Asia-Pacific nations have finally signed the Regional Comprehensive Economic Partnership (RCEP), hailed as one of the biggest free trade deals in history.
It covers over 2.2 billion people and accounts for 30 per cent of the world’s economy.
The signatory countries include 10 Association of Southeast Asian Nations (ASEAN) members — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam — and their five trade partners — Australia, China, Japan, South Korea and New Zealand.

Described as the “largest” regional trading agreement to this day, RCEP was originally being negotiated between 16 countries — ASEAN members and six countries namely Australia, China, Korea, Japan, New Zealand and India.
The purpose of RCEP was to make it easier for products and services of each of these countries to be available across this region.
The agreement also includes rules on intellectual property, telecommunications, financial and professional services, and e-commerce .
Negotiations to chart out this deal had been on since 2013, and India was expected to be a signatory until its decision last November.

However, in November last year, India announced its decision to not join RCEP.
This came amid concerns that elimination of tariffs would open India’s markets to imports, which in turn could harm local producers.
India had suggested some remedial measures. For instance, if imports rise beyond a threshold they should be allowed to impose some kind of barriers. But, the other member countries of RCEP didn’t agree to it.

Imbalance in the negotiations between goods and services was the main concern for India. Member countries pressured India to commit to zero tariffs on more than 90 percent of tradable goods with few exemptions.
However, they were reluctant to India’s proposal to allow free movement of Indian skilled professionals in the RCEP region.
Indian industries were also worried that with RCEP allowing a wide range of goods to import at zero tariffs, Chinese goods will flood India. It will cause serious damage to the “Make in India” programme.

India has trade deficits with 11 of the 15 RCEP countries, and some experts feel that India has been unable to leverage its existing bilateral free trade agreements with several RCEP members to increase exports.

Despite these concerns, RCEP will offer India an opportunity to engage with China.
It will give India a chance to stall some of its unfair practices such as giving subsidies unethically and stalling Indian products, such as pharmaceuticals, on the pretext of quality control.
RCEP will give Indian exporters a window to be a part of global value chains.

Also, there are concerns that India’s decision would impact its bilateral trade ties with RCEP member nations, as they may be more inclined to focus on bolstering economic ties within the bloc.
The move could potentially leave India with less scope to tap the large market that RCEP presents —the size of the deal is mammoth, as the countries involved account for over 2 billion of the world’s population.

India, as an original negotiating participant of RCEP, has the option of joining the agreement without having to wait 18 months as stipulated for new members in the terms of the pact.
RCEP signatory states said they plan to commence negotiations with India once it submits a request of its intention to join the pact “in writing”, and it may participate in meetings as an observer prior to its accession.

However, the possible alternative that India may be exploring is reviews of its existing bilateral FTAs with some of these RCEP members as well as newer agreements with other markets with potential for Indian exports. Over 20 negotiations are underway.
India currently has agreements with members like the ASEAN bloc, South Korea and Japan and is negotiating agreements with members like Australia and New Zealand.
Two reviews of India-Singapore Comprehensive Economic Cooperation Agreement (CECA) have been completed; the India-Bhutan Agreement on Trade Commerce and Transit was renewed in 2016; and the India-Nepal Treaty of Trade was extended in 2016.
Eight rounds of negotiations have been completed for the review of the India-Korea Comprehensive Economic Partnership Agreement (CEPA), which began in 2016. India has taken up the review of the India-Japan CEPA and India-ASEAN FTA with its trading partners.
There is also a growing view that it would serve India’s interest to invest strongly in negotiating bilateral agreements with the US and the EU, both currently a work in progress.

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