RCEP- An Analysis - Seeker's Thoughts

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Wednesday, 17 October 2018

RCEP- An Analysis

Introduction: - RCEP 6th inter-sessional ministerial meeting  
The 6th interregional ministerial meeting of regional comprehensive economic partnership RCEP was held in Singapore. The meeting was reviewed after 6th RCEP ministerial held in August 2018.  

What was the aim of the meeting? 
In the meeting, all the partner countries agreed to finalize trading deal by the end of this year. From Indian side minister of state for commerce & industry and consumer affairs, food and public distribution had attended the meeting. 

What is RCEP? 
Regional Comprehensive Economic Partnership (RCEP) – is a proposed free trade agreement (FTA) or comprehensive regional economic integration agreement between 10-ASEAN countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam) and its six FTA partners (Australia, New Zealand, India, China, Japan and Korea). The negotiations For RCEP was formally launched at 2012 ASEAN summit in Cambodia. 
10+6 RCEP member states accounted for population of 3.4 billion people with total GDP (in terms of PPP) of 49.5$ trillion, approximately 38% of the world’s GDP and 29% of the world trade. 
RCEP is viewed as an alternative to the Trans-Pacific Partnership (TPP), a proposed trade agreement that includes several Asian and America nations but excludes china and India. 

RCEP and India agreement 
-- India has insisted on concluding a “balanced and collectively satisfactory” RCEP agreement. 
-- India wants a services pact to be included in the government. 

Why India wants services pact in RCEP – Services are becoming a dominant driver of growth in both developed and developing countries. It contributes almost two-thirds of India’s GDP. Surplus (more income) in service trade finance is almost equal to the half of India’s trade deficit. India is pushing in services sectors for easier movement of its professionals to RCEP member countries. 

Why is India reluctant in joining the RCEP? 
RCEP pact India has negotiated with 15 other nation including china; the rising pressure for opening up markets in goods is making negotiations unsustainable. 
 India is not able to justify its continued efforts to reach a compromise. India’s inability to negotiate a good and services deal in the past, RCEP negotiations, especially with China, need a second thought. There are following reasons which should be considered from India’s front-  
1.    Indian industry will have more to lose than gain if it agrees to a liberal tariff elimination schedule specially with respect to china at a time of growing protectionism in the world. 
2.      Government think tank NITI Aayog, in a note on free trade agreements (FTAs) and their costs for India, has argued that the country needs to rethink joining the Regional Comprehensive Economic Partnership (RCEP) as it will be disastrous to provide more market access to China, which is a key player in the grouping. 
3.      The NITI Aayog note said while trade agreements are to promote bilateral trade, with both parties benefiting as a result of trade. With China, India’s trade seems to be skewed.  China’s capacity overhang in most sectors may lead to a surge of imports into India with very limited access for Indian exports to the Chinese market. 
4.      Growth in infrastructure and in the consumption of steel, antidumping duties are crucial at this stage. Accepting FTA will further hit steel Industry which is still recovering.  India’s steel ministry has strongly opposed the inclusion of finished steel products in the proposed regional free-trade agreement, saying it would have an adverse impact on the industry that’s recovering from a crisis.  

 Conclusion  
     India has been collectively engaged in RCEP negotiations with an aim to work towards a high quality, balanced and inclusive outcomes that take into consideration sensitivities and interests of member countries. 16 trade ministers will guide trade negotiating committee of RCEP to enable negotiations move forward. It would benefit India as RCEP is a mega trade pact that aims to cover goods, services, investment, economic and technical cooperation, competition and intellectual property rights.  
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