Behind Govt’s RCEP reluctance: Opposition from dairy to India Inc, Congress to Parivar
The decision to not join RCEP came in dramatic fashion given how the government positioned its stance on the issue in the last couple of days.
Prime Minister Narendra Modi attends the East Asia Summit on the sidelines of the 35th Association of Southeast Asian Nations (ASEAN) summit in Nonthaburi, Thailand, Monday. (AP)
Trade-related concerns apart, the government’s decision to suddenly back out of the Regional Comprehensive Economic Cooperation (RCEP) at the last minute comes in the backdrop of an Opposition onslaught, subdued results in the Maharashtra and Haryana elections, and the government’s own inability to hardsell the trade deal to key stakeholders including the RSS, small and marginal dairy farmers, and Corporate India.
The Opposition led by Congress called RCEP ill-timed given the slowdown in the economy. Congress chief Sonia Gandhi said it would cause untold hardship to farmers, SMEs and shopkeepers. “We can ill-afford to become a dumping ground for products, including agricultural produce from other countries,” she told her party leaders Saturday.
Not only the Opposition, the RSS too had cautioned against yielding too much in the trade deal especially with the domestic industry itself actually becoming a handicap for Indian negotiators. The other key drawback has been to use the RCEP as an opportunity to seek market access with China, with which India has a huge trade deficit and which has always fobbed off India’s requests in the past.
Explained: Why India has said no to RCEP
The decision to not join RCEP came in dramatic fashion given how the government positioned its stance on the issue in the last couple of days. A PMO statement at 10.34 am Monday said Modi “sought to dispel the notion that India is reluctant to join the RCEP trade deal” and quoted him telling Bangkok Post, in an interview, that “India remains committed to a comprehensive and balanced outcome from the ongoing RCEP negotiations but India would like a win-win outcome.”
Prime Minister Narendra Modi in a group photo with other world leaders at the 3rd RCEP Summit in Bangkok, Thailand, Monday, Nov. 4, 2019. (PTI)
Barely 48 hours earlier, Commerce Minister Piyush Goyal had targeted Sonia Gandhi for steering the Opposition agitation against joining RCEP — the Congress has been trying to corner the government by suggesting that the signing of RCEP would amount to helping China which is desperately looking to hedge its bets amid the Sino-US trade wars.
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“Smt. Sonia Gandhi ji has suddenly woken up to RCEP and FTAs. So where was she when her Govt. opened 74% of its market to ASEAN countries but richer countries like Indonesia opened only 50% for India? Why did she not speak against giving larger concessions to richer countries” Goyal posted on Twitter on Saturday asking, “Where was Sonia ji when her Govt agreed to explore an India-China FTA in 2007? I hope ex PM Dr Manmohan Singh will speak up against this insult to him.”
A powering down of the economy — with GDP growing at just 5% in April-June 2019, and no immediate signs of a turnaround — has emboldened the Opposition to launch an offensive against the government’s economic policies. Leaders from Opposition met in Delhi Monday to discuss the launch of their agitation beginning November 5.
In the evening, the government said it had decided not to join the RCEP trade deal for now.
Politically, the Opposition can claim to have stolen a march over the ruling BJP on this issue. The situation appeared similar to the one during the Modi government’s first term when it backed off from pursuing land acquisition reforms amid objections from the Opposition parties. Rahul Gandhi’s ‘suit book ki sarkar’ jibe in April 2015 too had left the government spooked.
Apart from the Opposition’s political line to corner the government on RCEP, Monday’s decision to withdraw also comes in the backdrop of BJP slipping in the Assembly elections in Maharashtra and Haryana, its scores below its 2014 performance. Internally too, reservations within the larger Sangh Parivar played on the government’s mind.
In his annual Vijayadashami address on October 8, RSS chief Mohan Bhagwat had cautioned the Centre against yielding too much in the negotiations. Invoking BMS founder Dattopant Thengadi, Bhagwat had advocated Swadeshi and suggested that the country “create and expand trade relations with the world on the basis of our strength and terms”. The RSS chief’s remarks on the economic slowdown and trade agreements encouraged the Swadeshi Jagran Manch to raise its pitch against the government’s proposals on FDI, disinvestment and trade deals in the coming days.
“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,” Modi said in his statement at the RCEP, justifying the move by pointing to the last person standing.
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