ndia should reconsider its RCEP decision

Context- This article discusses the need for India to reconsider its position on the RCEP
considering the recent developments.
What is the RCEP?

  • RCEP is a trade deal that created one of the world’s largest trading blocs.

    Its members include
  • 10 Association of Southeast Asian Nations (ASEAN) members: Brunei, Cambodia,
    Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
  • 5 other FTA partner countries of ASEAN: Australia, China, Korea, Japan, and New
  • RCEP members account for about 30% of the global GDP and 1/3rd of the world’s
    What are the ongoing developments with respect to RCEP?
  • Slower economic growth and increasing geopolitical fragmentation has led to slowdown
    of global trade.
  • In light of this, Sri Lanka and Bangladesh are considering joining the Regional
    Comprehensive Economic Partnership (RCEP).
  • For Sri Lanka, which is dealing with an economic crisis, easier access to regional markets
    could help it become more competitive.
  • For Bangladesh, RCEP could help compensate for export loss as it exits from the group of
    least developed countries.
  • Their joining the RCEP will also open markets for China in India’s neighbourhood.
    What has been India’s position regarding the RCEP?
    India exited the RCEP 4 years ago due to various concerns. These include:
  • Potential increase in the import of cheaper goods from member countries, particularly
  • Geopolitical and national-security considerations: Especially with respect to China.
  • Lack of safeguards: India had cited the grouping’s refusal to accede to its requests on
    safeguards as a deal breaker.
    What is India doing to counter the impact of not joining the RCEP?
  • India has been working with a different strategy of higher tariffs, along with fiscal
    incentives for large manufacturers.
  • Additionally, India is working on various free-trade agreements (FTA).
    Why should India reconsider its position?
  • Countries such as Australia and Japan have joined RCEP despite ongoing geopolitical
    tensions with China.
  • Lost opportunity to become part of the world’s largest and most dynamic trading bloc,
    which has the potential to enhance transnational economic integration.
  • India’s trade deficit with China has been increasing significantly despite India not joining.
  • It would give India the opportunity to deal with trade-related issues more effectively,
    besides opening markets of member countries.
  • Opportunity to become part of large global value chains: This will improve participation
    in global trade, which is critical in boosting local manufacturing and generating
  • Limited gains through FTAs.