50. What is the Regional Comprehensive Economic Partnership?

Recently, India opted out of the agreement on the ground that the deal would have an adverse impact on its citizens. But what is RCEP?

The Regional Comprehensive Economic Partnership (RCEP) is a proposed mega-regional economic agreement in the Indo-Pacific region between the members of the ASEAN and their five FTA partners, namely Australia, China, Japan, New Zealand, and South Korea. The negotiations were formally launched in November 2012, at the ASEAN summit in Cambodia. The stated goal of RCEP is to “boost economic growth and equitable economic development, advance economic cooperation and broaden and deepen integration in the region through the RCEP”. RCEP will cover all aspects of the economy such as goods and services, investments, economic and technical cooperation, etc. RCEP accounts for a population of 3.4 billion people, about half of the world population. It also accounts for 39% of the world’s GDP, a total of $49.5 trillion.

Although RCEP has gained momentum since 2016, concerns about RCEP has been voiced in several contexts. Firstly, it is believed that RCEP has the worst provisions on copyrights ever seen in a trade agreement. Secondly, it is RCEP is perceived as a tool that could be used by China to sell its cheap goods in a huge market.

India’s decision to not join the RCEP will significantly impact the agreement. Modi’s bold decision to withdraw from RCEP has attracted discussions at all levels. This is important considering India’s growing role in the global arena. First, India believes that RCEP as an agreement is one-sided and against the interests of the domestic industry, mainly farmers and small and medium enterprises. The agreement is also seen to be detrimental for India’s Make in India Initiative.

Secondly, the RCEP, as discussed, will flood Indian markets with Chinese products, which is against India’s interests and national priorities. In a way, it highlights PM Narendra Modi’s India first policy, and India’s rising protectionism.

Third, India also runs a trade deficit with many RCEP countries, a total of $105 billion, of which China alone accounts for $54 billion. India also didn’t get any credible assurance on market access and non-tariff barriers.

How far would the RCEP benefit or harm the country remains a matter of debate. Meanwhile, the remaining nations will make efforts to resolve India’s objections. There is room for India to win concessions on the demands. Considering that global dynamics have not remained the same since the pact was first negotiated, RCEP no longer looks like an attractive pact for India.