What is RCEP? What are the concerns raised against the RCEP deal?
The Regional Comprehensive Economic Partnership (RCEP) is a mega trade deal currently under negotiation among 16 countries which includes the 10 member countries of the Association of Southeast Asian Nations (ASEAN), and the six countries with which the ASEAN bloc has free trade agreements (FTA).
The members of ASEAN are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. The six nations with which ASEAN bloc has are India, Australia, China, South Korea, Japan and New Zealand.
Objective of RCEP
RCEP is labelled as the “largest” regional trading agreement ever. The member countries negotiating the deal account for almost half of the world’s population, contribute over a quarter of world exports and makeup around 30% of global Gross Domestic Product (the value of all goods). The objectives of the RCEP include:
- Create an integrated market spanning all 16 countries which makes it easier for products and services of each of these countries to be available across this region.
- Provide a framework for lowering of trade barriers and securing improved market access for goods and services for businesses in the region.
What are the concerns?
It is said that RCEP would allow India to tap into a huge market if the domestic industry becomes competitive. Pharmaceuticals and cotton yarn are sure shot gainers, and the services industry too will have new opportunities.
The concerns against RCEP include:
- Providing greater access to its market may result in cheaper alternatives from other RCEP countries hitting the Indian market. There are apprehensions that cheaper Chinese products would flood India.
- India has a poor track record of extracting benefits from the FTAs with these countries. India’s trade gap with these countries may widen further with the RCEP deal.
- Sectors like textiles, steel and dairy may be exposed to growing competition from neighbouring countries with cheaper and more efficient processes. As a result the domestic producers would impacted negatively.
Bone of Contention
21 of the 25 chapters in the deal have been finalised. Chapters on investment, e-commerce, rules of origin, and trade remedies are yet to be settled, and ministerial guidance is being sought at the ongoing meeting in Bangkok.