Regional Comprehensive Economic Partnership | RCEP in 2022
Table of Contents
Regional Comprehensive Economic Partnership
10 ASEAN members and their FTA partner nations(Free Trade Agreement) decided to form a regional economic grouping, which they termed as RCEP. Presently it have 15 member nations.
Formed
At ASEAN summit hosted by Vietnam on 15th Nov 2020.
About RCEP
Regional Comprehensive Economic Partnership
10 ASEAN members and their FTA partner nations(Free Trade Agreement) decided to form a regional economic grouping, which they termed as RCEP. Presently it have 15 member nations.
Members
Presently it have 15 member nations.
10 ASEAN members: Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar, Cambodia. And their FTA Partners: Australia, China, Korea, Japan, New Zealand.
Download RCEP Map
Purpose
- This group of 15 nations decided to create a integrated market economy in which goods and services trade can occur freely and with limited boundation.
- MEGA trade deal: it can be termed as mega because of the number of nations involved and their cumulative economy as well population.
- Cumulative population of RCEP member nation: 30% of world’s population
- Cumulative GDP of RCEP member nation: 30% of world’s GDP.
- Trans Pacific partnership was considered as the biggest trade partnership in current times but India and China were not party to it. So China backed RCEP with all its might to increase its stature further.
RCEP INDIA Issue
Lets see India RCEP issue
WHY INDIA DIDNOT JOIN RCEP
There are various reasons for India opting not to join RCEP, here is a summary of top reasons:
1.Trade deficit
India has already signed FTA with all the members of RCEP, excluding china and analysis of the post FTA trade shows that India still have trade deficit with all the members of RCEP. So basically its not FTAs which requires attention but the domestic industries promotion and growth which requires more attention.
2. Auto trigger mechanism Rejected by RCEP
As and when imports rise to such a level that it starts negatively impacting the domestic industries, the Auto trigger mechanism can save the situation by automatically blocking imports that hurts the domestic industries. This clause was not accepted by the RCEP, which is not acceptable to India
3. Protection of Domestic industries
The RCEP binds the countries to reduce current level of tariffs on imports to zero within 15 years. This clause will leave Indian domestic industries open to onslaught of cheap imports and ultimately to destruction of indigenous industries especially the MSME.
For example: Dairy products from New Zealand and Australia are of high quality as well as cheap, this will put Indian dairy industry at backfoot. Similarly the cheap steel from china.
4. Rule of origin
Rule of origin specifies tariffs on a product based on the nation in which product is produced. Current provisions in the RCEP does not prevent countries from circumventing their products from other countries.
India demands strict rules of origin so that it can prevent countries like China from flooding Indian market, by circumventing their products, through other nations of RCEP which have lower tariff rates.
5. Chinese Angle
RCEP is considered an agreement through which China wants to increase its clout in the Indian ocean region and Asia, India has trade deficit with china which is greater then combined trade deficit of India with all other RCEP member put together, So giving more access to china will further impact our trade deficit.
6. Opening up Market access to India
India excels in service sector but the RCEP deal does not offer greater market access in service sector especially involving movement of natural persons, which is a deal breaker for India.
Few basic question about FTAs
Question: What is/are Free Trade Agreements (FTAs)?
Answer: FTAs are arrangements between two or more countries or trading blocs that primarily agree to reduce or eliminate customs tariff and non tariff barriers on substantial trade between them. FTAs, normally cover trade in goods (such as agricultural or industrial products) or trade in services (such as banking, construction, trading etc.). FTAs can also cover other areas such as intellectual property rights (IPRs), investment, government procurement and competition policy, etc.
Question: Which are the major FTAs /CEPAs/ PTAs of India?
| S. No. | Acronym | Groupings | No. | Member Countries | FTAs/PTAs |
| 1 | APTA | Asia Pacific Trade Agreement | 5 | Bangladesh, China, India, Re public of Korea, Sri Lanka. – | PTA |
| 2 | India ASEAN TIG | India ASEAN Trade in Goods Agreement | 11 | Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam and India. | FTA |
| 3 | BIMSTEC | Bangladesh, India, Myanmar, Sri Lanka, Thailand Economic Cooperation | 7 | Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal. | Under negotiations |
| 4 | GSTP | Global System of Trade Preferences | 44 | Algeria, Argentina, Bangladesh, Benin, Bolivia, Brazil, Cameroon, Chile, Colombia, Cuba, Democratic People’s Republic of Korea, Ecuador, Egypt, Ghana, Guinea, Guyana, India, Indonesia, Iran, Iraq, Libya, Malaysia, Mexico, Morocco, Mozambique, Myanmar, Nicaragua, Nigeria, Pakistan, Peru, Philippines, Republic of Korea, Romania, Singapore, Sri Lanka, Sudan, Thailand, Trinidad and Tobago, Tunisia, Tanzania, Venezuela, Viet Nam, Yugoslavia, Zimbabwe. | PTA |
| 5 | IBSA | India Brazil and South Africa | 3 | India, Brazil and South Africa. | Under negotiations |
| 6 | SAFTA | South Asia Free Trade Agreement | 7 | India, Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan and the Maldives | FTA |
| 7 | ISLFTA | Indo Sri Lanka FTA | 2 | Sri Lanka, India | FTA |
| 8 | IMCECA | Indo Malaysia CECA | 2 | Malaysia, India | FTA |
| 9 | ISCECA | India Singapore CECA | 2 | Singapore, India | FTA |
| 10 | JICEPA | Japan India CEPA | 2 | Japan, India | FTA |
| 11 | IKCEPA | India Korea CEPA | 2 | South Korea, India | FTA |
Way ahead for India considering RCEP?
FTA with countries did boost our trade but in reality they have increased the trade deficit for India, which underscores important lesson for India i.e. to strengthen our domestic industries so that they can increase the export from India and also decrease our trade deficit.
Doors of RCEP is always open for India, as its members have openly stated. So strengthening our economy by reforms in Land, Labour and Capital factors, improving on Innovation Index, Ease of Doing Business Index, Targeted Export Promotion policies is the way forward.
Official RCEP Website
