From UPSC perspective, the following things are important :
Prelims level : RCEP countries
Mains level : Paper 3- RCEP and India's concerns about it
The article examines the significance of the RCEP and India’s concerns over its provision.
Significance of RCEP
- Last week, 15 East Asian countries signed the Regional Comprehensive Economic Partnership (RCEP), the largest free trade agreement (FTA) ever.
- In 2019, RCEP members accounted for about 30% of world output.
- More importantly, about 44% of their total trade was intra-RCEP, which is a major incentive for the members of this agreement.
- The deal could contribute to the strengthening of the regional value chains.
Comparing RCEP with Trans-Pacific Partnership (TPP)
- The TPP included several regulatory issues including labour and environmental standards and “anti-corruption”.
- All of these issues could raise regulatory barriers and severely impede trade flows.
- In contrast, RCEP includes traditional market access issues, following the template provided by the World Trade Organization (WTO).
- RCEP also includes issues like electronic commerce, investment facilitation that are currently being discussed by WTO members to “reform the multilateral trading system”.
Would RCEP be able to realise trade and investment liberalisation?
- In case of trade in goods, RCEP members have taken big strides towards lowering their tariffs.
- However, commitments made by RCEP members for services trade liberalisation do look shallow in terms of the coverage of the sectors.
- Movement of natural persons, an area in which India had had considerable interest, is considerably restricted.
- The areas of investment and electronic commerce, in both of which India had expressed its reservations on the template adopted during RCEP negotiations, the outcomes are varied.
- The text on investment rules shows that it is a work-in-progress.
- The rules on dispute settlement procedures are yet to be written in.
Will India’s concerns get addressed in near future?
- The answer seems to be unambiguously in the negative on two counts.
- 1) Two of the concerns India had raised, namely, the deep cuts in tariffs on imports from China, and provisions relating to the investment chapter, have become even more significant over the past several months.
- 2) India’s Atmanirbhar Bharat Abhiyan is primarily focused on strengthening domestic value chains, while RCEP, like any other FTA is solely focused on promoting regional value chains.
Consider the question “What were India’s concerns about RCEP that resulted in India not signing it? ”
This suggests that the prospects of India joining the RCEP in the near future appears bleak.