Regional Comprehensive Economic Partnership

RCEP has been signed by 15 countries.

Without India, 15 countries signed their participation in the RCEP.
India opted to stay out but the new trading block will remain open to India to return for negotiations.

RCEP is a Regional Comprehensive Economic Partnership.
At present, it is the largest regional trading agreement.
RCEP has been negotiated between 16 countries which includes ASEAN members and countries with which they have free trade agreements (FTAs).
The free trade agreement countries are China, Korea, Australia, Japan, New-Zealand and India.
The main motive of this agreement is to make it easier for the products and services of these countries and to be available across this region.
Since 2013, negotiations were made to chart out this deal and India was expected to be the main member.

On November 4, 2019 India decided to exit the discussions on significant outstanding issues.
The reason behind this, India has been consistently raising fundamental issues and concerns throughout the negotiations.
They had not resolved by the deadline to commit to signing the deal.
India decided to safeguard the industries like agriculture, dairy and the service sectors.
The current structures of RCEP do not resolve these issues and concerns.
One more reason is the presence of China.
India was uncomfortable with its commitments under RCEP, as it has taken various measures to reduce its exposure to China.
The unresolved issues during the RCEP were related to the exposure that India would have to China.
There were inadequate protections against surges in imports.
India will be unable to establish countermeasures to raise tariffs on products when their imports extended a certain threshold if it had joined the RCEP.
India also wanted RCEP to exclude Most Favoured Nation (MFN) obligations from the investment and also extend benefits to the member countries for sensitive sectors like defence.
RCEP lacked clear assurance on market access issues in countries like China and non-tariff barriers on Indian Companies.

India’s decision would impact its bilateral ties with RCEP member nations.
This will leave India with less scope to tap the large market that RCEP represents.
The member countries may incline to focus on bolstering economic ties with the blocks.
India’s decision could also impact the Australia-India-Japan network in the Indo-Pacific.
It may halt the talks to promote a Supply Chain Resilience Initiative among the three countries.
According to an assessment, the growth in trade, CAGR with the members for the past five financial years was only 7.1%.
But there has been a growth rate in both imports and exports to these FTA partners.
The utilization rate of FTAs with India was moderated with partners like Bhutan, Thailand, Afghanistan, Singapore, Sri Lanka, Japan, Nepal, Republic of Korea and Malaysia.
With 11 of the 15 RCEP countries, India has trade deficits.

India has the option of joining the agreement without having to wait 18 months as stipulated for new members.
The possible alternative may be exploring its existing bilateral FTAs with RCEP members.
India has agreements with ASEAN bloc, South Korea and Japan.
India is negotiating with members like New Zealand and Australia.
Some other agreements are the India-Singapore CECA, the India-Bhutan Agreement on Trade Commerce and Transit, the India-Nepal Treaty of Trade.
India is negotiating bilateral agreements with the US and the EU.