India and Regional Comprehensive Economic Partnership (RCEP)
Commerce minister Piyush goyal will attend intersessional ministerial meeting of RCEP that is going to be held on 11- 12 October at Bangkok, Thailand. These intersessional meetings are going to play decisive role as the RCEP FTA is ought to be concluded in November this year. Majority of the issues involving market access, Trade in Services and Investment as well as on other areas like Rules of Origin, Intellectual Property and Electronic Commerce have been discussed and concluded till the last round of negotiations held in September 2019 at Da Nang, Vietnam. But some of the critical chapters like investment, Electronic Commerce, Rules of Origin and Trade Remedies are still pending.
Regional Comprehensive Economic Partnership is a proposed Free Trade Agreement (FTA) between 10 ASEAN member states (Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, Vietnam) and 6 countries viz. Australia, People’s Republic of China, India, Japan, Republic of Korea, and New Zealand which ASEAN has individual FTAs. The first negotiations for RCEP were launched at 21st ASEAN summit held at Phnom Penh, Cambodia. RCEP FTA aims to improve the trade between its member nations by breaking tariff and non tariff barriers. RCEP will give thrust to the trade by providing a bigger market for finished goods and reducing the custom goods. When conclude RCEP will be the world’s largest FTA agreement as the member nations account for 45% of world’s population and total GDP of RCEP nation will amount to nearly 39% of world’s GDP.
- Providing open market access to the goods from other nations can hit the domestic industries of India hard as they are still in growing stage. Hence India is reluctant to provide open market access under FTA.
- Also India has huge trade deficit of US$60 billion with China. Lowering the custom duties and providing open market access to Chinese goods will worsen it anyways. Hence India wants a differential trade agreement with China.
Due to number of negotiations held to resolve these issues experts have advised the member states to conclude the FTA without India and leaving an option for India to join later.
Opportunities for India in RCEP:
- Indian goods will also get free market access for its goods to be exported in other countries. Also India has to spend lesser of its foreign currency to pay custom duties.
- Indian industries can improve after facing a competition from industries of other countries.
- India can easily exports its access agricultural harvest and end products of other potential industries to FTA nations
- After joining RCEP, India can negotiate with other nations to relax their norms for trade in services, so that its skilled people can easily get employment.