India’s No to RCEP Could Still Be a No

Context: While the Regional Comprehensive Economic Partnership (RCEP) has opened a window for India’s entry in future, the circumstances to which India distanced from it have hardly improved.

Significance of the RCEP:

• Largest Free Trade Agreement (FTA): accounting for about 30% of world output and population and 28% of world trade; about 44% of the trade was intra-Association of South-East Asian Nations (ASEAN).
• Objectives of RCEP:
  • Tariff liberalization: To progressively eliminate tariff and non-tariff barriers on substantially all trade in goods.
    • China has agreed to cut its average tari?s from 9.4% in 2014 top 1.2% for Australia and all ASEAN members by the 10^th year of implementation.
    • Vietnam does not have an exclusion list, while Malaysia had lowest level of protection.
  • Elimination of service restrictions: through aa comprehensive and high-quality agreement.
  • Framework on investments: to cover the four pillars of promotion, protection, facilitation and liberalization.
• Follows the World Trade Organisation’s template: It also includes other issues being discussed in the multilateral platform like
  • E-commerce and investment facilitation: along with legal framework ensuring the protection of personal information of the users of e-commerce (for public policy objectives).
  • Creating an enabling environment: for the participation of small and medium enterprises in global trade.

Reasons for India to not join the RCEP:

• Shallow service liberalization: Movement of natural persons, an area in which India had considerable interest, is restricted.
• Gaps in investment and e-commerce policy: The areas of investment and electronic commerce regulations are yet to be made along with rules on dispute settlement.
• Tariff cuts on Chinese imports: With the increased conflict with China in recent months, India is reluctant to allow Chinese imports without tariffs.
• Domestic focus: While the Atmanirbhar Bharat Abhiyan, is primarily focused on strengthening domestic value chains, while the RCEP promotes regional value chains.

Conclusion: Thus, there is a bleak possibility that India might think of joining the RCEP in the near future.