What’s in the news?
- Japan has conveyed that it still has not given up hope that India might reconsider joining the Regional Comprehensive Economic Partnership (RCEP) that it quit in 2019, indicating that India-Japan collaborations in other countries may be impacted if India continues to stay out.
- The Japanese Government said that India will be treated exceptionally as a founding member and if India is willing to negotiate its re-entry to RCEP, Japan would be happy to take a lead on that.
- 15 Asia-Pacific nations has signed the Regional Comprehensive Economic Partnership (RCEP) which covers over 2.2 billion people and accounts for 30 per cent of the world’s economy. It came into force on January 1 this year.
- 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.
- However, in 2019, 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.
Concerns of India
- 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 most of the 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.
Opportunities for India
- 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.