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India opposes rejoining RCEP over China concerns

Topics Covered: Effects of policies of other nations.

India opposes rejoining RCEP over China concerns

What to study?

For Prelims: Key features of RCEP.

For Mains: Why India refused to sign?

Context: May 15 was the deadline for a response to a fresh proposal of India rejoining negotiations on the ASEAN-led trade Regional Comprehensive Economic Partnership (RCEP).

Why India didn’t sign?

  1. India’s trade deficit with the RCEP nations is $105 billion, of which China alone accounts for $54 billion. Further relaxations would enhance the deficit.
  2. The worry is also over Chinese manufactured goods and dairy products from New Zealand flooding Indian markets, hurting domestic interests.
  3. The trade agreement was also seen as being detrimental to the government’s Make in India initiative.
  4. India was looking for specific rules of origin to ensure the trade pact wasn’t abused by non-partner countries and an auto-trigger mechanism to protect it from a surge in imports.
  5. Ecommerce and trade remedies were among other key areas of concern that failed to find satisfactory redressal.
  6. India has expressed its concerns over lowering and elimination of tariffs on products from other countries, as it would negatively affect the domestic agricultural and industrial sector.
  7. India was also worried about keeping 2014 as the base year for tariff reductions.

Relevance of RCEP post Coronavirus:

If anything the COVID-19 experience, and the experience of countries that have been overly dependent on imports from China or one country would have reinforced and revalidated the decision to stay out of RCEP.

But, how and why India should utilise this opportunity?

If India did want to rejoin the RCEP negotiations, there would be no better time than now, because it would send a signal to the world that not only is India an attractive place to invest, but also, its potential of being a global manufacturing hub.

India could also use the RCEP to generate “optimism” amongst Indian companies, given the uncertainty over demand and consumption due to the pandemic. Right now, businesses have very little to look forward to, and a major free trade area like the RCEP would be a good lodestar for them to revive optimism.

What is the RCEP?

The Regional Comprehensive Economic Partnership is a free trade agreement originally devised to consist of 16 countries across the Asia-Pacific region.

The pact looks to drop tariffs and duties between the members so that goods and services can flow freely between them.


At the RCEP’s administrative core is ASEAN: an intergovernmental grouping of 10 Southeast Asian countries – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

It was proposed that the ASEAN bloc will be joined with five dialogue partners: China, Japan, South Korea, Australia and New Zealand.



Prelims Link:

  1. RCEP- composition and objectives.
  2. India’s free trader agreements with ASEAN countries.
  3. India dairy sector.
  4. Geographical location of asean countries.

Sources: the Hindu.