Seize the Deal

The Indian Express     17th November 2020     Save    

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.