The BIG news as India celebrated Diwali over the long weekend, was RCEP and India not being a part of it.
This is the Regional Comprehensive Economic Partnership or RCEP deal. Out of the 16 nations in the RCEP, India is the only voice of dissent and it is being accused world over of being ‘protectionist’ and derailing years of bringing this RECP together.
After being a part of 28 of the 31 rounds of talks over the last six years, last November, India opted out and for once, India’s decision to stay off RCEP was unanimous – all political parties agreed that it was the best thing to do.
Today, especially in this atmosphere of heightened animosity with China due to its expansionist attitude, India not signing the RCEP has found more support as the deal makes China the super power of the region and currently, we do not want to be a part of it. But obviously, this was not cited as the reason. India wanted certain clauses renegotiated and redressed but that was never done.
From within India, there is a huge shout of protest from most sectors as the fear is that RCEP will flood Indian markers with cheap goods (mainly Chinese) and this will maim the small and medium scale sectors permanently. Most countries in the RCEP want India to slash existing tariffs on some 90% goods. Industries which are most worried are dairy (mainly exports from New Zealand), automobiles, textiles, steel, agriculture products – tea, coffee, rubber, cardamom and pepper. If we sign the RCEP, we will have to remove tariffs on 74% of goods imported from China, Australia and New Zealand, and 90% goods from Japan, South Korea and ASEAN.
But then, are we losing out on investments and trade because of this “protectionist” attitude as accused by the other nations? Yes, we will be isolated from a $2.8 trillion trade bloc. But at the same time, we need to be careful that India does not become a dumping ground for cheap Chinese goods. The Indian economy is already hurting from the pandemic and this, many fear, will further hurt.
Well, maybe what the Govt is aiming to sign is a new version of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) free trade. Trump had refused to sign it and Biden had indicated that he was open to the idea. This is where India is seeing a fairer opportunity and not the RCEP, which is nothing but just another mega-FTA, which as such has not worked well for us. The RCEP is nothing but just a backdoor FTA with China.
Its OK to not always toe the line. Sometimes, being a voice of dissent opens new doors, new opportunities. And whether the 15 nations like it or not, India, as an economy cannot be ignored. It’s their bigger loss…