Regional Comprehensive Economic Partnership (RCEP) is a highly ambitious Mega- Regional Free Trade agreement between the 10 Association of South-East Asian Nations (ASEAN) and their 6 Free Trade Agreement (FTA) partners: India, China, Australia, Japan, New Zealand & South Korea. These 16 countries account for 40% of Global GDP & 45% of Global Population.
The partnership which was introduced in the year 2012 is still under negotiation because of oppositions from nations regarding issues of base year, rules of origin, auto-trigger mechanism & trade remedies.
India is the 2nd fastest growing economy that is already struggling with GDP slow down and one more jolt of Free Trade with these 15 countries will hinder the growth further, directly hitting the agriculture & manufacturing sector. India's overall trade performance shows a deficit of $ 105.2 Billion in 2018-19 & has a trade deficit with 11 out of 15 RCEP countries, this being the figures before the agreement.
India, an agriculture-dependent country, as more than 50% of the workforce is still under this roof will be badly hit as India will be flooded with subsidized dairy & plantation products from New Zealand & Australia where more than 100 million small scale producers are engaged. New Zealand which exports 94% of its milk powder will be eyeing India which is the largest milk consumer. Indian Industry, farmers, civil society groups & Dairy producers are resisting the deal as RCEP gamble will not be in their favor.
India already has free trade agreements with most of RCEP countries, but the major worry is joining hands with China. Indians are already surrounded by Chinese manufactured products, with India’s trade with China constitutes 40% of the total deficit, Free trade will lead to a surge of cheaper Chinese products into India making the initiative of “Make in India” to “Make in China”. China which is currently facing the heat from the US because of the increasing tariff by the US on Chinese made products, China is looking at this deal as their best alternative to safeguard themselves.
Indians are still way behind the Chinese in terms of the technology and competitiveness, will the Indians manufacturers gear up and gain the benefits of RCEP if it is finalized?
Earlier as well Free trade agreement hasn’t been much beneficial to India as India’s inability to negotiate a good deal, RCEP agreement needs a second thought. Looking at the example of FTA with ASEAN, the merchandise trade has widened.
But Looking at the long term, if India goes against the deal, then the country will be isolated from the trading block which accounts for $ 2.8 trillion trade. It will be deleterious to India’s mission of Global Export Leader as it could miss becoming part of the global supply chain.
The stated goal of RCEP to “Boost economic growth and equitable economic development, advance economic corporation and broaden and deepen integration.” will be in vain if only 1 country reaps all the benefits.
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