Why in the news?
Leaders of the 10-member Association of South East Asian Nations have clearly committed to concluding negotiations for the Regional Comprehensive Economic Partnership free trade agreement by the end of 2019.RCEP: A gigantic free trade agreement
Notably, India, Australia, and New Zealand could join at a later date, allowing a truncated 13-member RCEP to go ahead.
What is the Regional Comprehensive Economic Partnership (RCEP)?
Launched in 2012, RCEP is a trade pact between the 10-member ASEAN block, along with China, Japan, South Korea, Australia, New Zealand, and India. It links around 3.4 billion people and when signed will be the world’s biggest free trade pact.
It includes ASEAN’s FTA partners — India, China, Japan, South Korea, Australia, and New Zealand.
This means a zero-customs duty zone in geography that contributes 34% of global gross domestic product (GDP) and 40% of world trade. The region is also home to almost half of the world’s population.
India and Regional Comprehensive Economic Partnership
- India has a trade deficit with as many as 11 of the RCEP.
- It is the only one among them that isn’t negotiating a bilateral or multilateral free trade agreement with China at present.
- As a result, although negotiators have agreed to New Delhi’s demand for differential tariffs for its trade with China vis-à-vis the others, India has also made tagging the “Country of Origin” on all products a sticking point in RCEP negotiations.
What is India’s stance?
- Despite its misgivings, however, the government has reiterated that it is committed to making RCEP work, and any attempt to cut India out of the agreement was “extremely premature”.
- In the next few months, India will be expected to keep up intense negotiations, and most importantly, give a clear indication both internally and to the world that it is joining RCEP.
- To that end, the Commerce Ministry has begun consultations with stakeholders from industries that are most worried about RCEP, including steel and aluminum, copper, textile and pharmaceuticals, and has engaged think tanks and management institutes to develop a consensus in favour of signing the regional agreement.
Why India should go ahead with RCEP?
1. It will be in continuation with Look East Policy and the subsequent Act East Policy. It will cover a large area of South East Asia and further. Europe and North America may not remain in the focus of trade.
2. Important and necessary imports with suitable price and quality will increase.RCEP: A gigantic free trade agreement
3. There is no logic of fear among the industry as it adjusted when the Indian economy opened up in 1991.
4. It will lead to increased exports thereby leading to the creation of more jobs.
5. Giving up the chance to join RCEP would mean India would miss out on regional trade.RCEP: A gigantic free trade agreement
6. It will also lose the ability to frame the rules as well as investment standards for the grouping if it does not join.
7. Above all, at a time of global uncertainties and challenges to multilateralism and the international economic order, a negative message on RCEP would undermine India’s plans for economic growth.
Source: The Hindu