RCEP sans India, can it alter trade dynamics?

Tribune News Service

New Delhi, November 4

India’s decision not to join the Regional Comprehensive Economic Partnership (RCEP) agreement tonight put halt to a major exercise undertaken to form one of the largest trading blocs in the Asia-Pacific region with China as the leading economy in the group.

After seven years of negotiations, the RECP meant to include the Association of Southeast Asian Nations (ASEAN) and six of the bloc trading partners, was touted as an agreement with potential to alter trade arrangement in the world at a time when the trade war between China and the United States is causing all-round concern.

The 16 countries collectively have trade relations worth $49.5 trillion, accounting for 28 per cent of the world trade and 33 per cent of the GDP. What tilted India’s decision was that it did not find the emerging contours fair and balanced.

Over the past few days, negotiators privy to the discussions said while agreement was all but ready in 16 of the 20 chapters. The four areas of disagreement included e-commerce, e-investment, rules of origin and trade remedies.

One of the principal concerns of India was that with the balance of trade with China heavily against it, the prospects of throwing open its vast market for inexpensive products would not only cause huge hardship to the country but also apprehensive that products from China could enter from other countries under it.

Interestingly, all countries in the Regional Comprehensive Economic Partnership have their own bilateral trade going on with China and some countries in ASEAN are unwilling to upset its relations with Beijing. In fact, hours ahead of the RCEP meeting, New Zealand announced the move to improve upon its Free Trade Agreement with China.

Recently, former Foreign Minister of Australia Stephen Smith during a seminar in Delhi was categorical that RCEP minus India was not worth it.

This stood in contrast with the view articulated by Malaysian Prime Minister Mahatir Mohammed that ASEAN should think of going ahead with RCEP with China, Japan and South Korea since other countries had reservations. The idea found no takers.

Can the RCEP emerge as an alternative to the Asia-Pacific Economic Cooperation (APEC), the 21-Pacific Rim countries group that India is keen to join but denied entry?

Strategic community in Australia is making efforts to get New Delhi on board the group, which drew inspiration from ASEAN. China is a member of APEC but RCEP has the potential to alter the trade dynamics with China in the lead.