Seize the Deal

Context:  Recently, 15 countries came together and signed the Regional Comprehensive Economic Partnership (RCEP) on the side-lines of the Association of South-East Asian Nations (ASEAN) summit.

Concern of India in joining the RCEP:

• Adverse impacts on Manufacturing, Agriculture and Dairy sectors: due to inadequate safeguards and lowering of customs duties.
• Strategic concerns: due to Chinese presence in RCEP.

Reasons for which India should join RCEP:

• Large Economic Share: RCEP is a trade bloc representing 30% of the global economy touching over 2.2. billion people.
• Free Trade Agreements are not the reason for trade deficits: India’s deficit with China is higher than that of the remaining RCEP constituents put together.
• Cheaper imports: Import of cheaper intermediate goods help to add value to final products.
• Support from other nations: While China acts as a maritime challenge to India, other nations such as Australia and Japan have not stayed out of RCEP despite their strategic concerns.

Conclusion: Instead of sitting out and building tariff walls, India should join the RCEP and incentivise industries to become competitive.