INDIA DID NOT JOIN RCEP
CONTEXT: At the third RCEP summit in Bangkok on November 4 2019, India chose not to join the RCEP agreement citing its negative effects on farmers, MSMEs and dairy sector.
WHY INDIA PULLED OUT OF RCEP
- The deal required the gradual elimination of tariffs which could have flooded Indian markets with Chinese goods and agricultural produce from Oceania harming local producers.
- India has a major trade deficit with all the countries in RCEP, china being the biggest concern with which we have a $53 billion trade deficit.
- Lack of assurance on market access from other countries.
- The RCEP negotiators had insisted on keeping 2014 as the base year for tariff reduction but India had asked the base year to be kept at 2019.
- There was a lot of resistance within India as well. Most industry and farmer bodies like the all India Kisan Sangharsh coordination committee (AIKSCC), the confederation of all India traders, The central Arecanut and cocoa marketing and processing cooperative limited (CAMPCO) , all had their own concerns and were against India joining
- However many including the confederation of Indian industries were of the opinion that India had a very limited view of curbing imports of china, while overlooking the export growth opportunities that could have been exploited by joining RCEP.
- RCEP afforded a fleeting opportunity for India to hitch for open regionalism at a time when protectionism and regionalism are casting a pall over India’s economic rise in global system.
- Without an economic strategy in Asia India will have no strategy in Asia.
Thus there is an urgent need for India to institute structural reforms in the domestic market, so that such an opportunity doesn’t go abegging next time.
We should pursue factor market reforms so that we will never have to face such dilemma again.