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Scope of discussion
If you have been following our series on International Organisations, we talked about East Asia Summit (EAS) where we briefly touched upon RCEP.
Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) between –
RCEP includes more than 3 billion people, has a combined GDP of about $17 trillion, and accounts for about 40 percent of world trade. By any means, this is a huge community in making.
From India’s point of view, the RCEP presents a decisive platform which could influence its strategic and economic status in the Asia-Pacific region and bring to fruition its “Act East Policy.” It is expected to be an ambitious agreement bringing the 5 biggest economies of the region – Australia, China, India, Japan and South Korea – into a regional trading arrangement.
There are three immediate benefits that its trade policymakers should note-
#1. The RCEP agreement would complement India’s existing free trade agreements with the ASEAN and some of its member countries.
This consolidation can address challenges emanating from implementation concerns vis-à-vis overlapping agreements, which is creating a “noodle bowl” situation obstructing effective utilization of these FTAs.
It will also help achieve its goal of greater economic integration with countries East and South East of India through better access to a vast regional market ranging from Japan to Australia.
NOTE: India is not a party to two important regional economic blocs: the Asia-Pacific Economic Cooperation and the Trans-Pacific Partnership. The RCEP would enable India to strengthen its trade ties with Australia, China, Japan and South Korea, and should reduce the potential negative impacts of TPP and TTIP on the Indian economy.
#2. Gets India closer to ASEAN
#3. India can leverage its capabilities in IT, Healthcare, Education and services
New Delhi fears the TPP, although years away from reality, could mean losing some textile and drugs exports to countries like Vietnam, which has embraced both the TPP and the RCEP.
TPP is set to change the landscape of global trade. For India, it is most likely to affect sectors like leather goods, plastics, chemicals, textiles and clothing.
We will discuss more about TPP in a later discussion but suffice to say that RCEP’s realisation is important for India.