New Delhi: It is in the interest of the region as well as India’s own economic interest for New Delhi to sign up for RCEP (Regional Comprehensive Economic Partnership), argued former top Australian diplomat Peter Varghese on Monday. Varghese the former Secretary of DFAT (Department of Foreign Affairs and Trade) and the former High Commissioner to India authored the Australian government commissioned 'India Economy Strategy Paper' that was unveiled a year ago. At a CII-led seminar in New Delhi to discuss the recommendations of the paper, Varghese hoped that India would join RCEP in the near future.
“If you look at the global economic outlook at the moment, and if you look at the pressures that trade liberalisation is encountering, to have an agreement which covers a third of global GDP and about a third of the global population at a time when trade liberalisation is being severely tested is an important step forward. In terms of India’s own economic aspirations and interests, I hope that at some point the judgment would be that being in is better than being out. So we remain hopeful that at some point in the not too distant future we can see India inside RCEP,” emphasised Varghese.
Asked about India’s ongoing review of bilateral FTAs (Free Trade Agreements) with several countries and the arguments against it, Varghese said that India and Australia have different ambitions when it comes to negotiations on trade liberalisations. He added that India has had a mixed experience and its level of ambition on FTA negotiations have been lower. Whereas the central premise in Australia is predisposed to FTAs being a useful tool for the economy.
After long-drawn negotiations with 10 member countries of the Association of Southeast Asian Nations (ASEAN) and the bloc's dialogue partners including China, Japan, South Korea, Australia, and New Zealand, India pulled out of the proposed RCEP agreement during the ASEAN summit held in Bangkok.
“Today, when we look around we see during seven years of RCEP negotiations, many things, including the global economic and trade scenarios, have changed. We cannot overlook these changes. The present form of the RCEP Agreement does not fully reflect the basic spirit and the agreed guiding principles of RCEP. It also does not address satisfactorily India's outstanding issues and concerns. In such a situation, it is not possible for India to join the RCEP Agreement," said PM Modi in his speech in Thailand announcing a decision to pull out.
Also read: Our 'forceful opposition' saved country from RCEP: Congress
Asked if quitting RCEP will make it harder for India to offer concessions for ongoing negotiations on FTAs with US and EU, P Harish, Additional Secretary (Economic Division and States ) in the Ministry of External Affairs said that India had trade deficits to its disadvantage with all the 15 members who have agreed to RCEP. While India has a trade surplus with the US and EU, he remarked.
The 'India Economy Strategy Paper' is a blueprint to transform the trade, commerce and investment partnership between Australia and India majorly by 2035. Varghese batted for Australia to put more of its export eggs into the Indian market given its different demography.
Also read: Will love to see India in RCEP final agreement: NZ minister
Meanwhile, Harish assured that while there is a cyclical and structural economic slowdown, the Indian government is addressing the concerns sector-wise with a recent focus on automobiles to real estate. The panellists underlined the need to have direct air connectivity between India and Australia to boost tourism and business. Energy, renewables, FinTech, Animation gaming, Banking solutions, Medical technology, Gems and Jewellery have been identified among the key sectors to boost the bilateral economic relationship.
Senior Journalist Smita Sharma spoke to former Australian Foreign Secretary Peter Varghese about India’s pullout from RCEP. Here’s the exclusive conversation.
Q. What significant progress has been made on the India Economy Strategy report?
Peter Varghese: Where the progress has been made is that the government has taken a deliberate and methodical approach to the recommendations. We now have a mechanism in place to ensure progress is made on the implementations.
Also read: EXCLUSIVE: India is apprehensive about RCEP, says economist Apte
Q. What is the messaging to the world with India pulling out of RCEP
Peter Varghese: RCEP would have been a stronger agreement with India in from the outset. I don’t read India’s position as a categorical rejection of ever joining us. We were very careful to keep that door wide open and I really do hope that India will at some stage walk through that door. I think it is certainly In the interest of the region to have India inside this new trade liberalisation mechanism and it is also in India’s long term interest for it to be part of bigger trade liberalisation agenda in the region as well as being part of what is the at the moment the only step forward on trade liberalisation in an otherwise gloomy global economic outlook.
Q. Indian industry argues that it will be flooded with cheap Chinese products and government argues that FTAs with ASEAN countries has led to trade deficits to its disadvantage. Your thoughts.
Peter Varghese: Ultimately these are judgements only India can make. We all face domestic pushback against trade liberalisation. We all have to make judgements about the balance of benefits. All I would say is the Australian experience has been that ambitious FTAs deliver results. If you look at deals we have struck with China, Japan, the range of other countries, in all of those cases trade figures have improved and both countries have benefitted. I think it is possible to do this in a way in which both parties benefit and there is no winner or loser.
Q. Do you find the fears of India turning into a dumping ground for China exaggerated?
Peter Varghese: I can understand the concerns India has. But ultimately you have to make your judgements about the balance of interests. No one has every sector advanced. These are judgements only governments can make.
Q. Are you hopeful of CECA (Comprehensive Economic Cooperation Agreement) concluding between India and Australia?
Peter Varghese: CECA was put on hold to see RCEP. Now that we have a picture of the landing point for RCEP, the Government will have to form a view of the way forward. There are many many things to build this economic relationship and expand our trade and investment which is not contingent upon the conclusion of CECA. We should not assume that only future for this relationship rests on CECA or RCEP. That is far from the case.
Q. Does RCEP stand to lose if India does not join?
Peter Varghese: RCEP will be weak without India. I Think RCEP would be a much stronger agreement with India in than with India out. For countries like Australia, it is important that the door remains open for India to participate in RCEP and I hope down the track that that open door can be walked through. If you look at the global economic outlook at the moment, and if you look at the pressures that trade liberalisation is encountering, to have an agreement which covers a third of global GDP and about a third of the global population at a time when trade liberalisation is being severely tested is an important step forward. In terms of India’s own economic aspirations and interests, I hope that at some point the judgment would be that being in is better than being out. So we remain hopeful that at some point in the not too distant future we can see India inside RCEP.
