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The Economy without RCEP

India’s moving out of the Regional Comprehensive Economic Partnership is less likely to heal its ailing economy.

 

How can we characterise the Government of India’s withdrawal from the Regional Comprehensive Economic Partnership (RCEP)? Is this decision accounting for the electoral verdict of those common Indians who have voiced apprehension about the adverse impact of such free trade agreements (FTAs) on their livelihoods? Or, is it the victory of the government’s autonomous political will over the temptations of entering into such plurilateral negotiations that are potentially beneficial in its bid for regional (economic) supremacy? Or, is it coerced by the diplomatic interests of the top players in the global economy? Whatever may be the case, we must compliment the ruling government for its courage in pulling itself out of a trade bloc that is conceived to govern two-fifths of the world trade. Unfortunately, however, when viewed on a historical spectrum, this valour falls flat, for the government’s choice emerges more as a politically contingent, if not superficial, “act”, than any cohesive “policy” of economic integration.

The RCEP, like many other regional trade agreements (RTAs) in the Asia–Pacific region, is centred on the Association of Southeast Asian Nations (ASEAN). Though the ASEAN, over the past decade or so, has led a number of trade-related dialogues/strategies in the region, it has failed to address substantial generic issues of regional trading such as dumping. For instance, China’s use of the ASEAN, particularly Singapore—where India has both FTAs and double taxation avoidance agreements (DTAAs)—as the route for dumping its low value products into India, though recognised, still continues unabated. Without an “origin of product” clause in most of the FTAs signed by India, establishing the source of dumping remains difficult. With India insisting for such clause in the RCEP, its being in the partnership is potentially conducive for its overall trading arrangements in the region. Is RCEP then a lost opportunity for India? Will withdrawal from RCEP affect India’s credibility as an intra-regional trading partner? If intra-regional trade is so important for economic well-being, why did the Indian government not persist on negotiating favourable terms by staying in the group, instead of quitting it?

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Updated On : 12th Nov, 2019

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