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While starting off, it’s important to note Singapore’s Foreign Minister’s call for India to reassess its stance on Regional Trading Agreements like the Regional Comprehensive Economic Partnership (RCEP) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This came up during the 6th edition of the Raisina Dialogue, a highly regarded Indian conference on geopolitics and geoeconomics.
A Closer Look at the Regional Comprehensive Economic Partnership (RCEP)
The RCEP is heralded as the world’s largest Free Trade Agreement (FTA), spearheaded by 10 Southeast Asian Nations with key partners including China, Japan, South Korea, Australia, and New Zealand. Despite its significance, it could be awhile before any nation reaps its benefits, primarily due to ratification challenges reflective of anti-trade and anti-China sentiments. Interestingly, Singapore was the first nation to complete the official ratification process.
Why RCEP Matters
Various aspects make RCEP integral. Firstly, it carries the potential to eliminate numerous tariffs on imports within two decades. Also, it encompasses intellectual property, financial services, telecommunications, e-commerce, and professional services. Furthermore, parts from any RCEP nation would receive equal treatment, possibly urging RCEP businesses to source their supplies within the trade region. It also could spike global national income by USD 186 billion annually by 2030. But, critics argue that countries like China, Japan, South Korea could disproportionately benefit from this deal. A significant factor for India’s withdrawal was the fear of an influx of Chinese goods and inadequate openness to services.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
The CPTPP is another crucial FTA involving 11 countries, namely Canada, Mexico, Peru, Chile, New Zealand, Australia, Brunei, Singapore, Malaysia, Vietnam, and Japan. Conceived after the US withdrew from Trans-Pacific Partnership negotiations, the renamed CPTPP came into being in December 2018.
CPTPP’s Significance
The CPTPP is marked by the elimination of 99% tariffs on goods and services. Its purview covers a wide spectrum, including financial services, telecommunications, and food safety standards. Plus, it addresses environmental concerns like wildlife trafficking and unsustainable logging and fishing practices. India didn’t join CPTPP due to its stringent labor and environmental standards and imposing transparency requirements.
Why India Should Reconsider RCEP & CPTPP
India’s reconsideration of its stance towards RCEP & CPTPP could boost its manufacturing sector, considering these blocs represent a significant chunk of the world economy. This might also permit India to emerge as an export platform. Moreover, India has existing or potential trade relations with various RCEP & CPTPP nations, which can only strengthen with these agreements. These pacts would also pave the way for Indian companies to tap into larger markets.
Leveraging its economic might, India should potentially reevaluate its position on RCEP & CPTPP. Bearing in mind the current global economic scenario, it would be wise for India to institute reforms that would aid it in navigating through repercussions arising from these agreements.
Last Modified: February 11, 2024