Closing the door for now on the Regional Comprehensive Economic Partnership (RCEP), India Monday said it will not join the 16-nation trade agreement since it “does not reflect its original intent” and the outcome is “neither fair nor balanced”.
The other 15 nations in the regional grouping — 10 of ASEAN plus China, Japan, South Korea, Australia and New Zealand — decided to go ahead and sign the pact next year.
The joint statement issued by the 16 countries at the end of the RCEP summit stated: “We noted 15 RCEP Participating Countries have concluded text-based negotiations for all 20 chapters and essentially all their market access issues; and tasked legal scrubbing by them to commence for signing in 2020.”
“India has significant outstanding issues, which remain unresolved. All RCEP Participating Countries will work together to resolve these outstanding issues in a mutually satisfactory way. India’s final decision will depend on satisfactory resolution of these issues,” the joint statement said.
Underlining his government’s decision, Prime Minister Narendra Modi, in his statement, said “neither the Talisman of Gandhiji nor my own conscience permit me to join RCEP”.
Delhi’s decision comes in the wake of opposition to the pact from the Congress as well as outfits of the Sangh Parivar, apart from some in the domestic industry.
The umbrella trade agreement promises to be the biggest free-trade zone in the world. These countries are home to 3.6 billion people, or nearly half the world’s population, and account for around one-third of global gross domestic product.
ASEAN leaders originally proposed the idea of RCEP in 2012 which was endorsed by then Prime Minister Manmohan Singh’s government, and talks began in 2013.
In his statement, Modi said, “Today, when we look around we see during seven years of RCEP negotiations, many things, including the global economic and trade scenarios have changed. We cannot overlook these changes.”
“Our farmers, traders, professionals and industries have stakes in such decisions. Equally important are the workers and consumers, who make India a huge market and the third biggest economy in terms of purchasing power parity. When I measure the RCEP Agreement with respect to the interests of all Indians, I do not get a positive answer. Therefore, neither the Talisman of Gandhiji nor my own conscience permit me to join RCEP.”
Australian Prime Minister Scott Morrison said the door will remain “wide open” for India to join RCEP. “The door will always be open to India,” Morrison was quoted as saying by the Australian Associated Press (AAP). He also said that the deal would be bigger and better with India in it. “It has always been our view, and the view of many who sit around the table, that this is a bigger and better deal with India in it,” Morrison said. “I think patience is the virtue in this,” he said.
According to government sources, the key issues include “inadequate protection against import surge”, “insufficient differential with China”, “possible circumvention of rules of origin”, “keeping the base year as 2014” and “no credible assurances on market access and non-tariff barriers”.
Sources said that some issues on which India made its stance clear included the threat of circumvention of Rules of Origin due to Tariff Differential. “India pushed for a fair agreement which addressed the issues of trade deficits and opening of services. India also asked for safeguard mechanisms to prevent against import surges and safeguard the interests of domestic industry. India also raised the unviability of MFN obligations where India would be forced to give similar benefits to RCEP countries that it gave to others. There was also no credible assurance for India on market access and non-tariff barriers. India also had very valid concerns on keeping 2014 as the base year for tariff reductions,” sources said.
There was a need, sources said, to address India’s concerns over trade deficits and the need for other countries to open their markets to Indian services and investments.
Modi said that India stands for greater regional integration as well as for freer trade and adherence to a rules-based international order.
“India has been pro-actively, constructively and meaningfully engaged in the RCEP negotiations since inception. India has worked for the cherished objective of striking balance, in the spirit of give and take. Thousands of years before RCEP was conceived, Indian traders, entrepreneurs and common people built abiding contacts with this region. For centuries, these contacts and ties made valuable contribution to our shared prosperity,” he said.
MEA’s Secretary (East) Vijay Thakur Singh said India has conveyed its decision to the RCEP countries, and “it is the right decision for India”.
“This reflects both our assessment of the current global situation, as well as of fairness and balance of the agreement. India had significant issues of core interest that remained unresolved… We would continue to persevere in strengthening our trade, investment and people-to-people relations with this region,” she said.