Regional Comprehensive Economic Partnership (RCEP)

[op-ed snap] The economics of RCEP and potential outcomes for India


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: How India will gain from being a part of RCEP


RCEP negotiations & what’s at stake for India

  1. The Regional Comprehensive Economic Partnership (RCEP) agreement is under negotiation and has remained a much-contested subject in recent times
  2. If India is out of the RCEP, it would make its exports price uncompetitive vis-à-vis other RCEP members’ exports in each RCEP market
  3. The ensuing export-losses contributing to foreign exchange shortages and the subsequent extent of depreciation of the rupee can only be left to imagination

RCEP a comprehensive agreement

  1. This is because it helps to tap the economic complementarities that get generated due to the interlinkages among various segments of trade
  2. These inter-linkages are particularly important when India endeavours to integrate with a region, which has been the most successful region of the world in terms of thriving regional value chains (RVCs)
  3. These RVCs necessitate freer movement of professionals across countries in the region

Reaping benefits for the demographic dividend

  1. The vector of India’s demographic dividend is concomitant to the vector of the “ageing” population in most RCEP countries
  2. This skill-matching needs to be focused in the realm of RCEP negotiations by signing an RCEP Agreement on Movement of Natural Persons Harnessing Regional Skill-Complementarities

India’s efforts in ensuring private sector exports

  1. India’s policymakers are trying to balance the objectives of efficiency-yielding calibrated import liberalization, without sacrificing on the domestic sensitivities
  2. It has to be matched with ensuring reciprocal market access for the Indian private sector’s exports in the markets of RCEP

Gains for India

  1. There are enormous export gains that could accrue to India from RCEP under varying scenarios
  2. This assumes even greater importance since our focus has been on products with favourable terms of trade for India
  3. Thus per-unit foreign exchange realization from these products will be greater than per-unit foreign exchange expenditure on imports of similar products within intra-industry trade pattern
  4. Some of the sectors that have been identified as potential sources of India’s export growth impulses under RCEP to the tune of approximately $200 billion

Way Forward

  1. There are more compelling trade and economic reasons for RCEP to become India-led in future
  2. India must play its due role to get its due place in the regional economic configurations
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