In a new turn of events, China has begun to advocate for the establishment of a free trade agreement between ASEAN and an additional three countries; namely itself, Japan, and South Korea. This development was formally proposed at the East Asia Summit, with the aim of involving all 16 nations currently negotiating the Regional Comprehensive Economic Partnership (RCEP), excluding India, Australia, and New Zealand.
The Proposed Pact and Its Implication on RCEP Members
The RCEP is a proposed free trade pact among 16 nations including the ten-member ASEAN countries as well as Australia, China, India, Japan, South Korea, and New Zealand. The strategic proposition from China is seen as a means to exert pressure on India, compelling them to offer similar concessions to those awarded by other nations in RCEP negotiations. An ulterior message being delivered herein is that China would not hesitate to bypass India if it continues to maintain an inflexible stance during these negotiations.
Potentially, the proposition could lead to mounting pressure upon India from countries like Australia and New Zealand who wouldn’t want to be excluded from the proposed pact. Furthermore, the suggestion is stirring uncertainty within the member states regarding India’s continued involvement in the process.
Japan’s Position and India’s Challenges
Prior to this, Japan had been firm on advocating for India’s involvement in the negotiation processes. Their motivation stemmed from the belief that India could act as a counterweight to China’s attempts to amplify its influence over the region. However, if China manages to come to terms with Japan on this issue, India may find itself navigating rough waters.
RCEP Proposal and India’s Apprehensions
| RCEP Proposal | Impact on India |
|---|---|
| Zero tariffs on over 90% of traded items | Potential flooding of market with Chinese goods |
| Largest free trade bloc accounting for 25% of global GDP | Threat to domestic producers leading to reduced production or closures |
The RCEP nations have put forth the proposition that over 90% of traded items should be subjected to zero tariffs. However, India has been hesitant to align itself with this notion and holds apprehensions over the possible consequences. A primary concern for India is the risk of its market being flooded with Chinese goods, thereby undercutting local producers and potentially forcing them to scale back production or shut down completely.
The Significance of RCEP
If agreed upon and finalized, the RCEP stands to create the largest free trade bloc in the world. The enormous influence of this trade bloc would be palpable, representing 25% of the global GDP and 30% of all world trade. The stakes are high, and the decisions made in these negotiations will undeniably have significant global implications.