On Monday, Prime Minister Narendra Modi met with the leaders of ASEAN in Bangkok. India refused to sign the RCEP agreement.
4th of November marked the Indian ‘walk out’ from the RCEP (Regional Comprehensive Economic Partnership) agreement that could have had a great impact on the Indian Economy.
What is RCEP?
The pact aims a FTA (Free trade agreement) corridor between the members so that the goods and services can flow freely. The scale of RCEP is at making it a game-changer.
The RCEP would’ve would’ve been the largest trading bloc with
•1/3rd of Global GDP
•1/2 of World’s Population under
Why did India do so?
•Indian markets would’ve flooded with Chinese goods thus, killing Indian businesses.
•India’s trade deficit with RCEP countries have been huge, due to reduction of 80-90% of goods, would have been sweet deal for China and a complete poison for India.
The Sectors that would have been most affected are~
1. Dairy Sector
2. Textile Sector
3. Marine Sector
4. Chemical Pharma and Plastic
5. Iron Steel and Non-ferrous Metals
The FTA could have hurt AMUL, and our own manufacturers and handloom sector. Smaller fishermen are already fighting with the big trollers, and with this agreement they would have been completely marginalized. The Indian medicines would have been challenged at the price level. Already China dominates global markets in respect to steel production is itself not a good news and then, if the situation goes out of the hand then it would have killed our own producers.
Jobs could have got further destroyed and Indian small and medium industries would have faced the onslaught of the Dragon’s trade.
China is market hungry?
China in 2012 initiated, even though the pact is a mechanism originated by the ASEAN countries and hence it clearly proved the Chinese inclination of the deal.
Since China was excluded from the US-led TPP agreement, in order to counter the consequences China pushed RCEP in 2012. But later on when Donald Trump came to power in 2016 the US withdrew from TPP agreement.
What did India find missing in the deal?
Keeping dairy, auto and certain Textiles out of the deal.
If sudden flooding of markets is noticed. In such a case, option to stop imports or raise duties should have been present.
More strict investment regime and dispute management were expected to be in place.
Change in base tariffs from 2014-2019.
Stricter ‘origin of product’ norms to curb the abuse of FTA.
This deal wouldn’t have been a level playing field for Indian producers,and with the current situation of Indian Economy compromise is not an option.