Context: India should have signed the Regional Comprehensive Economic Partnership(RCEP) agreement to influence the institutional politics of regional trade.
Arguments against joining the RCEP:
Hollowed out provisions: Provisions related to services sectors are hollow along with the absence of provisions on issues like the environment, labour, intellectual property and investor-state disputes.
Agriculture allows for exemptions, including fisheries.
Inadequate rules on trade in services, including data effectively negating the free trade principles.
Chinese Dominance: Chinese leaders have used the vacuum to portray it as a reliable partner of choice for economic growth, trade, and investment.
RCEP rules do not require China to make any changes that cover exchange rate policies or domestic subsidies, reforms other countries wanted to ensure a level playing field.
China will benefit more from RCEP: from export and import by virtue of its size.
The provisions provide enough room for China to draft necessary data rules given its "security and public policy exceptions".
To uphold Self-Sufficiency: Denunciation of trade was in some way required to uphold the ideology of economic self-sufficiency that currently pervades public discourse.
Protectionist fears: Indian officials had consistently pushed back against specific goods like dairy and agriculture from markets like Japan and Australia, which would harm domestic producers.
Growing Trade Deficit: India's trade deficit with the Association of South-East Asian Nations(ASEAN) worsened from 2018-19 to 2019-20 from $22 billion to $24 billion;
Arguments in Favour of India Joining RCEP:
Economic significance:
It includes 15 countries (10 from ASEAN and Australia, China, Japan, New Zealand and South Korea;
Covers nearly a third of the global population: with collective Gross Domestic Product (GDP) amounts to $26 trillion.
Abolish 90% of all tariffs on goods: between participating members; signatories will then have two years to ratify before the agreement becomes effective.
Simplifies customs procedures and rules-of-origin laws: which will reduce potential regulatory frictions for firms and countries in terms of production.
Integrating global supply chains: Asian countries are focused on diversifying trading partners, solidifying supply chains, and achieving economic and job growth.
Political and geopolitical value: RCEP affirms a regional commitment to trade liberalization and continued integration during the times of pandemic and increased protectionism due to trade war between US-China.
RCEP could become an institutionalized core platform: to discuss a widening agenda on issues not covered currently like artificial intelligence, digital currency and blockchain.
It will help occupy the vacuum created by the failure of the World Trade Organisation(WTO): countries across Asia-Pacific to clear bottlenecks and secure extra market access.
Loss to India: Keeping out of RCEP may hut India in the following ways:
Indian will remain outside the institutionalized orbit where future discussions, amendments, additions and revisions to RCEP could occur.
Unconstrained by global or regional pressures, Indian firms will not be compelled to innovate or adapt their internal operations.