As Outstanding Issues Remain, India Opts Out Of RCEP


NEW DELHI: India is not joining Regional Comprehensive Economic Partnership (RCEP), the 16-nation grouping which brings together the 10 ASEAN states, China, Japan, South Korea, Australia and New Zealand into what is touted as the world’s biggest free trade area. None other than Prime Minister Modi spelt out India’s reasons for staying out.

“We see that during seven years of RCEP negotiations, many things including the global economic and trade scenario have changed. We cannot overlook these changes,” he said, adding that “The present form of the RCEP Agreement does not fully reflect the basic spirit and guiding principles of RCEP. It also does not satisfactorily address India’s outstanding issues and concerns. In such a situation, it is not possible for India to join the RCEP Agreement”.

India’s dissatisfaction reportedly centred around some key areas including inadequate protection against a surge of imports, insufficient differential with China, possible circumvention of rules of origin, keeping the base year as 2014 and no credible assurances on non-tariff barriers and market access.

India’s concern about a surge of cheap Chinese goods that could wipe out its small businessmen and manufacturers was never addressed. The RCEP rules would have required India to eliminate tariffs on more than 70 per cent of imports from China, Australia and New Zealand and 90 per cent of goods from ASEAN, Japan and South Korea.

The RCEP website noted that “India has significant outstanding issues which remain unresolved. All RCEP Participating Countries will work together to resolve these outstanding issues in a mutually satisfactory way. India’s final decision will depend on satisfactory resolution of these issues”.

So it would appear that the door remains open for India to join RCEP at some future date. But trade experts in Delhi were disappointed by the failure to seal a deal. “The prime minister had indicated he was positive about it,” recalled Rajat Kathuria of ICRIER (Indian Council for Research in International Economic Relations). Even the Commerce Ministry had made favourable comments.

Clearly, RCEP’s refusal to address India’s concerns and pressure from the domestic lobby, ranging from industrialists and businessmen to farmers, killed the deal for Delhi.

“It leaves India isolated,” said Kathuria, “and perhaps the way forward is to negotiate a trade agreement with the U.S., Europe and then maybe the UK”. The U.S. is also isolated after pulling out of the Transpacific Partnership in 2017.


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