Context: 7th RCEP Inter-Sessional Ministerial Meeting is being held in Cambodia.
What you need to know about RCEP?
RCEP is proposed between the ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, Vietnam) and the six states with which ASEAN has existing FTAs (Australia, China, India, Japan, South Korea and New Zealand).
RCEP negotiations were formally launched in November 2012 at the ASEAN Summit in Cambodia.
Aim: RCEP aims to boost goods trade by eliminating most tariff and non-tariff barriers — a move that is expected to provide the region’s consumers greater choice of quality products at affordable rates. It also seeks to liberalise investment norms and do away with services trade restrictions
Why has it assumed so much significance in recent times?
When inked, it would become the world’s biggest free trade pact. This is because the 16 nations account for a total GDP of about $50 trillion and house close to 3.5 billion people. India (GDP-PPP worth $9.5 trillion and population of 1.3 billion) and China (GDP-PPP of $23.2 trillion and population of 1.4 billion) together comprise the RCEP’s biggest component in terms of market size.
Why is India concerned?
Greater access to Chinese goods may have impact on the Indian manufacturing sector. India has got massive trade deficit with China. Under these circumstances, India proposed differential market access strategy for China.
There are demands by other RCEP countries for lowering customs duties on a number of products and greater access to the market than India has been willing to provide.
Why India should not miss RCEP?
If India is out of the RCEP, it would make its exports price uncompetitive with other RCEP members’ exports in each RCEP market, and the ensuing export-losses contributing to foreign exchange shortages and the subsequent extent of depreciation of the rupee can only be left to imagination. Some of the sectors that have been identified as potential sources of India’s export growth impulses under RCEP to the tune of approximately $200 billion.
There are more compelling trade and economic reasons for RCEP to become India-led in future, than otherwise. India would get greater market access in other countries not only in terms of goods, but in services and investments also.
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