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India should rethink its decision on RCEP

20 0 0
17.11.2019

By Dr. Nehginpao Kipgen and Shivangi Dikshit

On Nov. 4 India decided not to join the Regional Comprehensive Economic Partnership (RCEP), a free trade deal involving the 10 countries of the Association of Southeast Asian Nations (ASEAN), China, South Korea, Japan, Australia and New Zealand.

The agreement aims to reduce tariff rates to a considerable level and boost the exchange of goods and services within the member states. Had India decided to join the deal, RCEP would have the world's largest free trade area covering 45 percent of the world's population, and also account for 39 percent of global GDP, 30 percent of global trade, and 26 percent of global foreign direct investment flows.

Indian Prime Minister Narendra Modi, in his speech at the RCEP summit in Bangkok, said, "The present form of the RCEP Agreement does not fully reflect the basic spirit and the agreed guiding principles of the RCEP. It also does not address satisfactorily India's outstanding issues and concerns. In such a situation, it is not possible for India to join RCEP Agreement."

What has led India to finally abandon the deal it has negotiated since 2012? More importantly, India should rethink its decision on RCEP. Having India on board can be a win-win strategy for all RCEP countries, including India.

India's concerns

RCEP negotiations were launched at the ASEAN summit in Cambodia in November 2012. In September 2015, India offered to eliminate tariffs on 42.5 percent of items from China, and more for ASEAN states.

India improved its offer by agreeing to eliminate tariffs for about 90 percent of items from ASEAN, and over 74 percent of items from China. However, the government's offer saw a backlash in 2018 when key ministries and departments, including steel, textiles and heavy industry, objected to the proposal.

India felt........

© The Korea Times