India withdraws from RCEP
On November 4, 2019, India decided against joining Regional Comprehensive Economic Partnership (RCEP) trade deal as India did not receive any credible assurance on market access and non-tariff barriers. This paved way for the other 15-members to go ahead and sign the deal keeping the door open for India to join at later date.
Reasons of Withdrawal
India has trade deficit with at least 11 of 15 RCEP countries. It has doubled in the last five years from 54 billion USD in 2013-14 to 105 billion USD in 2018-19. Of this China alone accounts to 53 billion USD. Signing the RCEP will widen trade deficit and will empty foreign exchange reserve of India at a faster rate.
Australia and New Zealand are now in search of free access to market their diary products. Similarly Indonesia and Vietnam are looking for places to dump their less quality rubber. India being the largest market in the world, dumping such less expensive goods will affect domestic goods of India
The China Factor
The RCEP deal is in favor of China. China is now looking for greater access (as an alternate) to Indian market with the trade war with the US. A failure to find an alternate will have a cascading effect on Chinese economy and its global ambitions. India by not signing the RCEP deal has refused to be a willing dumping ground of China’s trade imperialism.
Category: Economy & Banking Current Affairs