Why India must open its doors for RCEP

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.