RCEP trade deal: Lost opportunity for India? An explainer

RCEP trade deal: Lost opportunity for India? An explainer

The signing comes a year after Prime Minister Narendra Modi formally announced the country's exit from the mega FTA after seven years of negotiations.

Li said that after eight years of negotiations, the signing of the RCEP has brought light and hope to people amid the current grim worldwide situation, showing that multilateralism and free trade remain the correct direction for the world economy and human progress.

Fifteen Asia-Pacific economies, representing over a quarter of the global GDP and population strength, signed the historic Regional Comprehensive Economic Partnership (RCEP) agreement on November 15.

"This will encourage firms to invest more in the region, including building supply chains and services, and to generate jobs".

As COVID-19 continues to spread, unilateralism, protectionism are rising, he said, adding that the signing of the RCEP will be a strong boost to regional and global economic recovery.

RCEP focuses heavily on cutting tariffs and increasing market access but is seen as less comprehensive than the CPTPP. Further, we would highly value India's role in RCEP and reiterate that the RCEP remains open to India.

Professor Heng Wang, co-director of UNSW Law's Herbert Smith Freehills China International Business and Economic Law (CIBEL) Centre said the RCEP means "more opportunities" for Australian businesses. "But in the case of RCEP, in its given form, it was felt that it was not beneficial to the Indian economy".

The Chinese state media reported that India along with Japan and Australia is now pushing the Supply Chain Resilience Initiative (SCRI) to reduce the world's reliance on Chinese industrial chains.

"While the RCEP agreement provides the Philippines with greater access to the larger consumer markets of China, Japan, South Korea and Australia, we at Fitch Solutions highlight that red tape restrictions are only part of the barriers businesses face exporting from the Philippines", Fitch Solutions Senior Asia Country Risk Analyst Michael Langham said in an e-mail.

In a world unsettled by ominous threats of protectionism, uncertainties and economic crisis, the RCEP upholds rules-based free trade, globalization, worldwide cooperation, stability and economic growth.

For China, the new group, including many USA allies, is a windfall largely resulting from Trump's retreat from the TPP, said ING's Pang. RCEP signatory states have said they will restart negotiations with India for joining the pact once New Delhi submits a written request.

Former Finance Minister P Chidambaram has questioned the absence of India in the Regional Composite Economic Partnership (RCEP).

RCEP is the world's largest business entity. Following this, the trade deficit with RCEP countries rose to $78 billion in 2014 from $7 billion in 2004.

Longer-term, Li described the agreement as "a victory of multilateralism and free trade".

He said the RCEP could facilitate smaller ASEAN economies such as Cambodia, Laos and Myanmar, to further strengthen their FTAs and to narrow the development gap among ASEAN member states by spurring foreign direct investment (FDI) to smaller economies and integrating them more fully into regional economic activity.

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