CURRENT AFFAIRS
REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP
( RCEP )
Association of South East Asian Countries
(ASEAN) is a Regional grouping of this
specific geographic area as the name
suggests. The member nations are, Indonesia,
Malaysia, Philippines, Brunei, Laos,
Singapore, Cambodia, Vietnam, Thailand,
Myanmar.
Since 2011, ASEAN members along with strategic
partners like India, China, Australia, New Zealand
etc., are trying to get into Regional Comprehensive
Economic Partnership (RCEP). which on the
business end is similar to Trans Pacific Partnership
(TPP) but lacks on the points of business ethics like
Labour laws and Environmental laws.
RCEP is proposed to be one free trade area which
will include 3.4 billion people across the East Asian
and Oceania region, with a GDP of more than $22
trillion and intra RCEP trade would account for more
than 30 percent of global trade, as it would integrate
the three largest economies of Asia-China, Japan
and India. For India, accession to this opening it's
large market of 1.25 billion people for the products
from 15 countries including 10 ASEAN members and
the five dialogue partner countries - China, Australia,
New Zealand, Japan and Korea. during the last few
meetings of RCEP negotiations, India has made it
very clear that it would not compromise on issues
related to trade in services and also
addressing concerns related to the small and medium
enterprises in the negotiations. The dilemma that
India faced over being a part of RCEP was the fact
our unorganised sector and MSME's would have
gotten affected. The fact that we already have a huge
trade deficit with China, made things even worse
because signing of RCEP meant flooding of Indian
markets with even more Chinese products that too
even without a category based regulation.
India has not yet been inducted into the Asia-Pacific
Economic Cooperation (APEC) which could have
prepared the country for business standardization
and harmonization of tariffs as per the APEC
provisions. This would have created the base for
effective implementation of the RCEP trade
provisions with necessary structural support.
It might also create social problems given the fact
that Chinese cheap products have already decimated
electronics, mobile, toys and silk industry in India.
The cascading effect has left very large number of
both skilled and unskilled labour jobless. Given the
fact that select sectors in India are still labour
intensive, retrenchment of workers has a political
cost. There are apprehensions projected by industry
associations that cheap imports would adversely
impact the steel, chemicals, textiles, copper,
aluminium, and pharma industry. India has a sizeable
share of global trade in automotive parts, pharma and
textile industry, and so negotiations would be a long
drawn affair. Further, strategic experts feel that India
must not become an ancillary industry to chinese
production network as it would jeopardize India's rise
in future as a production and skill centre in Asia. Also,
it will put China as the benefactor of India's industrial
change which might not be palatable to the political
class.
The Niti Aayog, in 2017, had published a report that
pointed out that free trade agreements have not
worked well for India. It analysed multiple free trade
agreements that India signed in the past decade.
Among those were FTA with Sri Lanka, Malaysia,
Singapore, and South Korea.
The Niti Aayog analysis showed that import from FTA
countries increased while export to these destinations
did not match up. Even India's export to FTA
countries did not outperform its' overall export growth.
The Niti Aayog found that FTA utilisation by India has
been abysmally low between 5 an 25 percent.
How much of a difference would RCEP make without
India is open to interpretation. With India RCEP
would have envisaged half of the world's population
and one-third of global economy. But India also
should keenly look into signing FTA or trade deals
with EU and post Brexit UK.
article by Advait Nambiar