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18 Jan India and Regional Comprehensive Economic Partnership (RCEP)

Posted at 18 Jan 2022 in Current Affairs by Vivek Raj 0 Comments

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Why in News?

The South Korean trade Minister said that it is a regret to see India’s absence from RCEP.
India did not join RCEP which came into effect on January 1st 2020.

It is a free trade agreement between ASEAN countries and Japan, South Korea , Australia , New Zealand and China.
It is the largest free trade agreement in the world in terms of volume of trade.
It aims to make easy accessibility of products and services of each of the member countries to be available across the region.
It will also help the companies to reduce its time and cost by eliminating the need for separate requirements to export in each country.

India’s trade deficit with China is already very high. It is higher than that of the remaining RCEP members put together. This free trade agreement would allow more Chinese good to flood the Indian market without proper safeguard and further accentuating the trade imbalance.
India has unfavorable trade balance with most of the member countries of RCEP. Trade has increased post free trade agreement with South Korea, Japan and ASEAN countries but mainly saw the rise of import then export from India.
India has raised concerns for its domestic industry. New Delhi has been apprehensive about lowering and eliminating tariffs on products like dairy, steel etc. Example, Tariff on Dairy products in India is on an average 35% and for the RCEP bound countries they have to reduce the current tariff 0% within next 15 years.
India also had concerns about the rules of origin. Rules of origin basically determine the source country of the product. Now the current provision of RCEP does not prevent Rerouting the product from the source of origin to another country. In the absence of it, India would lose revenue on the products where it could maintain higher tariffs.
India also put forward the demand for the Auto triggered mechanism. It states that the import of the products crossing the threshold limit would allow India to raise tariffs on that product. However the other members of the RCEP were against it.

By withdrawing from the world’s largest free trade agreement India blocked itself from the opportunity of accessing 30% of the global economy and over 2.2 billion world population.
The ongoing covid-19 pandemic scenario has impacted the global economy severely.In this situation where the economy is declining , RCEP can help and re-energize the economic activities.
India shall not perceive RCEP as only trade significant but shall also view it as a strategic move necessary to safeguard its own interest and interest of many other countries.

Conclusion

Considering the importance of India in the world and its economic value in Global trade, RCEP has left the door open for India ,inviting it to be an observer member.
India shall review its position on RCEP, given the Global economic scenario in present and in the near future.(GS Paper-II,International Relations) Source: The Hindu