The Indian delegation attended the 7th Regional Comprehensive Economic Partnership (RCEP) Inter-Sessional Ministerial Meeting in Singapore on 12-13 November 2018, piloted by the Union Minister for Commerce & Industry and Civil Aviation. This meeting revealed divisive issues, causing the year-end target for a substantial conclusion to be delayed for one year due to key differences. The NITI Aayog government think-tank advised India against joining the RCEP, stating that it would result in disastrous implications for India.
Understanding RCEP
RCEP is a wide-scale free trade agreement which focuses on the areas of goods, services, investments, economic and technical cooperation, competition and intellectual property rights. Currently, negotiations for this agreement are ongoing amongst 16 countries, including the 10 ASEAN countries and their six ASEAN FTA partners, namely India, China, Japan, South Korea, Australia, and New Zealand. The goal of the RCEP negotiations is to achieve regional economic integration, thereby establishing the largest regional trading bloc in the world. This trade bloc would likely account for 25% of global GDP, 30% of global trade, 26% of foreign direct investment (FDI) flows, and incorporate up to 45% of the global population.
Issues between India and RCEP
The involvement of China in the RCEP raises concerns for India, particularly in light of the $63 billion trade deficit with China that India experienced during 2017-18. There is fear that greater market access to China under RCEP conditions could negatively impact India’s labour-intensive domestic industry. China’s tendency to dump iron and steel products into India’s market poses a specific risk to the India’s steel sector. India has also expressed hopes for more liberalisation in the services sector – particularly in relation to the mobility of professionals amongst RCEP-member countries, a proposal that has met with resistance from these countries due to perceived threats from China and India. The country also expressed worry over probable measures that could result in losing the right to produce cheap, generic drugs, this is because of the enforcement of stringent IPR regulations related to patent term extension and data exclusivity.
| RCEP Statistics |
|---|
| 25% of global GDP |
| 30% of global trade |
| 26% of FDI flows |
| 45% of global population |
Potential advantages of joining RCEP
Benefits for India stemming from participation in the RCEP would be predominantly related to gaining access to the Asia Pacific region, which will be crucial for India’s future economic and strategic status within the region. By joining the RCEP, India can enhance its Act East Policy, which builds on the Look East Policy for a more intimate partnership with the Asian region. Additionally, becoming an RCEP participant would facilitate India in expanding its trading relations with countries like Australia and New Zealand – countries with which India currently lacks a formal trading partnership as a result of absence in APEC and Transatlantic Trade and Investment Partnership.
The way forward
Once finalized, the RCEP holds potential to emerge as the most effective and sizable free-trade bloc in the world. Exclusion from new regional trade chains is a circumstance India cannot afford, establishing its participation in the RCEP as crucial. However, addressing legitimate concerns of Indian trade and commerce must be prioritized.
