Why India Decided not to Join RCEP?

The Regional Comprehensive Economic Cooperation (RCEP) is a free trade agreement between Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam in the Asia-Pacific region. The significance of the RCEP also lies in the fact that it is the world’s largest trade bloc, with 15 member nations accounting for around 30% of the world’s population (2.2 billion people) and 30% of worldwide GDP ($29.7 trillion). The Regional Comprehensive Economic Partnership (RCEP), signed in November 2020, is the first free trade deal between Asia’s four largest economies: China, Indonesia, Japan, and South Korea.

What is Regional Comprehensive Economic Cooperation?

The RCEP (Regional Comprehensive Economic Partnership) was first proposed at the 2011 ASEAN Summit in Bali, Indonesia, and formal discussions began at the 2012 ASEAN Summit in Cambodia. India was invited to join the group at any moment after taking part in the early negotiations but later opted-out. Any other country or separate customs territory in the region will be able to join the deal 18 months after it enters into force, on July 1, 2023. On November 15, 2020, at the virtual ASEAN Summit hosted by Vietnam, the treaty was legally signed. So, now it is clear what is Regional Comprehensive Economic Cooperation.

Purpose Of The Regional Comprehensive Economic Cooperation (RCEP)

The following is the purpose of the Regional Comprehensive Economic Cooperation (RCEP):

• The RCEP intends to create an integrated market with 16 nations, making it easier for each of these countries’ products and services to be available throughout the region

• Trade-in goods and services, assets, intellectual rights, dispute settlement, e-commerce, small and medium-sized businesses, and economic cooperation are all on the table

So, these are the purpose of the Regional Comprehensive Economic Cooperation. 

Significance Of The Regional Comprehensive Economic Partnership (RCEP):

The following is the significance of the RCEP:

• The Regional Comprehensive Economic Partnership (RCEP) improves trade and investment relations between member countries by lowering non-tariff barriers (NTBs) to goods and services trade
• Because import tariffs were already quite low among RCEP members, the agreement concentrates on NTBs
• It harmonises the rules that countries impose on goods trade, giving traders and investors more assurance
• The RCEP is intended to benefit its members, with modest benefits for the rest of the globe
• Reduced trade and investment barriers would boost economic integration among RCEP member nations, allowing for large trade advantages
• According to recent modelling, the pact will boost the trading bloc’s GDP by 0.4 percent (equal to $170 billion) by 2030, with China gaining 0.3 percent and ASEAN nations gaining 0.2 percent

Why did India Decide Not To Join RCEP?

The reasons for India not to join RCEP are as follows:

• China was the single most important factor for India’s reluctance to join the RCEP (Regional Comprehensive Economic Partnership) among the economic reasons stated. As a result of the Covid-19 pandemic and the ongoing border standoff with China, New Delhi has chosen not to join any trade agreement, including Beijing

• It is no secret that China’s participation in the RCEP is well aligned with Beijing’s market imperialist objectives for the Belt and Road Initiative

• India was concerned that the accord would be turned into a free trade agreement with China through the back door, maybe via other nations, which is one of the reasons New Delhi is currently examining several regional FTAs

• One of India’s key concerns was the threat to local manufacturers posed by the RCEP’s abolishing tariffs, which it feared would open its markets to a flood of imports. New Delhi was particularly concerned about the risk of circumvention of origin laws due to tariff differentials and the inclusion of a fair accord to resolve trade deficits and service openness

• The worry is apparent, as existing trade agreements and tariff liberalisation initiatives have resulted in low-cost imports and a wider range of low-cost goods. India’s indigenous sector has been unable to compete with imports over the last 15 years, as seen by the rise in import demand. As a result, foreign products have infiltrated the domestic market, particularly in the industries of edible oil processing, autos, electronics, communications, and white goods

• Experts have warned that the RCEP might harm India’s massive dairy industry since Australian and New Zealand farmers could flood Indian markets, killing mostly unorganised and inefficient small-scale Indian producers

• A mega-trade deal like the RCEP, if India’s industry had been competitive enough, would have provided a barrier-free regional market for their products, promoting “Make-in-India.” The agreement would have reduced import levies on 80% to 90% of items and simplified service and investment requirements

Conclusion: 

Since it is clear what is Regional Comprehensive Economic Cooperation we can say that the institutionalisation of the RCEP (Regional Comprehensive Economic Partnership) can aid in the management of the multilateral trade system’s current threats. It is well-positioned to encourage the development of Asia-wide positions and strategies that will aid in defence of the system and positively influence global trade and commercial policy, allowing ASEAN and its East Asian partners to better navigate and manage the threats to regional prosperity and stability. Several analysts predicted that it would help signatory countries’ economies recover from the COVID-19 pandemic and “pull the economic centre of gravity back towards Asia.