Mains Paper 2: IR | Bilateral, regional & global groupings & agreements involving India &/or affecting India’s interests
From UPSC perspective, the following things are important:
Prelims level: RCEP
Mains level: Impact of joining RCEP on Indian economy as well as foreign policy
Big success for India
- Members of the proposed RCEP trade deal have conceded to India’s demand to liberalize their services market and allow movement of skilled professionals.
- This may help India, which had so far been a reluctant participant, to conclude RCEP negotiations by the year-end.
- There has been inevitable linkage between services and goods negotiations, because RCEP is not a goods agreement alone, and services must be an integral part of the agreement.
- RCEP countries will open up opportunities for India’s burgeoning skilled professionals seeking gainful employment.
Space for bilateral negotiations
- Members also agreed that countries, which do not have trade agreements, can negotiate bilaterally to decide more ambitious tariff liberalization within a certain range.
- India is also likely to phase out tariffs on certain sensitive items with China beyond 20 years.
- This will allow India to allay concerns of domestic industries such as steel and textiles, which fear that China will start dumping goods once RCEP takes effect.
Regional Comprehensive Economic Partnership (RCEP)
- It is a proposed free trade agreement (FTA) between ASEAN and six Asia-Pacific states.
- Members: ASEAN Members (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) and the six Asia-Pacific states (Australia, China, India, Japan, South Korea and New Zealand).
- RCEP negotiations were formally launched in November 2012 at the ASEAN Summit in Cambodia.
- The FTA is scheduled and expected to be signed in November 2018 during the ASEAN Summit and Related Summit in Singapore, after the first RCEP summit was held on 14 November 2017 in Manila, Philippines.
- RCEP is viewed as an alternative to the Trans-Pacific Partnership (TPP), a proposed trade agreement which includes several Asian and American nations but excludes China and India.
- Importance of RCEP:
- In 2017, prospective RCEP member states accounted for a population of 3.4 billion people with a total Gross Domestic Product (GDP, PPP) of $49.5 trillion
- It is approximately 39 percent of the world’s GDP with the combined GDPs of China and Japan making up more than half that amount.
- RCEP is the world’s largest economic bloc, covering nearly half of the global economy.
- RCEP’s share of the global economy could account for half of the estimated $0.5 quadrillion global GDP (PPP) by 2050.