New Delhi: Reasoning that the Regional Comprehensive Economic Partnership (RCEP) would have resulted in negative consequences for the Indian economy, External Affairs Minister S Jaishankar on Wednesday said RCEP is not in the nation's interest and that after making the right calculations the decision was taken.
Addressing an online discussion organised by the Centre for European Studies, Jaishankar said, “India pulled out of RCEP about a year ago at the last East Asia Summit in Bangkok. India was part of the negotiations but we reached a point and finally came to a decision. Essentially, we saw that a number of our key concerns were not addressed.
We had to then take a call whether you enter a trade agreement if your major concerns are not addressed or do you take a call saying this is not in my interest”.
“India took a call that given the way it is currently, it [RCEP] is not in India’s interest, and to enter the agreement as it is would have fairly immediate negative consequences for India’s economy. Negotiating doesn’t mean that one has to suspend the ability to calculate at the end of the negotiation. I think India made the calculation”, Jaishankar said.
On the proposed free trade agreement between India and the European Union, Jaishankar said New Delhi was looking for a fair and balanced pact.
The minister added that several key concerns flagged by India regarding RCEP were not addressed.
"Frankly according to me, what India did about RCEP is not a generic position vis-a-vis trade", EAM reiterated.
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India was part of the RCEP negotiations for nearly seven years. The unresolved issues included inadequate protection against import surge, lack of credible assurances to India on market access, non-tariff barriers and possible circumvention of rules of origin by certain countries. Referring to the long-pending India-EU free trade agreement (FTA), Jaishankar said: "We want a fair and balanced FTA", but added that what is fair and balanced is a subject of negotiation.
RCEP is one of the largest regional trading agreement has been signed by 15 nations on Sunday without India. Even as India opted to stay out after walking out of discussions last year, the new trading bloc has made it clear that the door will remain open for India to return to the negotiating table.
However, the RCEP has polarized experts as many are in favour of India opting out of the trade deal and many are opposing India’s decision of staying out of Asia’s mega free-trade pact.
ETV Bharat spoke to experts on the matter.
Renowned Economist Dr N.R Bhanumurthy said, “India is not ready to get into any serious trade blocs because of our issues. We do not have any assessment of what would be the net impact of such trade groupings on India. Especially, India already has a Free Trade Agreement (FTA) and the Bilateral Trade Agreement (BTA) with many of the countries that joined RCEP. With all of them, India did not benefit out of it. There is an effort to relook at all these negotiations especially FTA and BTA’s. We don’t have any database on which our trade negotiations can happen on the table. We try to argue on the margin but I think, we don’t have information on the data to get into serious negotiation with any countries in a group like RCEP”.
Bhanumurthy added that unless India has a holistic understanding of what are the areas it can be competitive with the trading partners, it would not be in a position to go for a good negotiation.
"India was always on the receiving end in terms of importing more from other countries”, Bhanumurthy pointed out.
"Therefore, before we get into RCEP, we need to strengthen our domestic conditions, we need to see whether there is any way India can improve competitiveness compared to the other countries of the world. Until then getting into such trade bloc, India will probably end up in at a receiving end," he opined.
Foreign policy expert and a senior fellow at the Institute for Defense Studies and Analyses, New Delhi, Ashok Behuria said, “India pulled out of the RCEP because India considers it not in its interest and unfair. There was also India’s concern about dumping by Chinese manufacturers. India also calculated that agricultural and dairy products will be also dumped in India thereby affecting our internal producers. So that is why India chose not to be a part of it finally.
Behuria added that even though India was part of the discussion which resulted in RCEP, it did not join because joining it would have hampered its economic interest.
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“India noticed that if it becomes a part of the RCEP, there will be a flow of goods and products from China which will crowd out our products. It will harm India’s domestic industry”.
India, therefore, chose to stand by its own internal domestic, industrial producers. There have been critics who are saying that India should not have left the opportunity. But the decision has been taken to protect our domestic base and producers. I think the decision that India took is in the best economic interest”, Behuria added.
Economist Aakash Jindal further pointed out that at the outset, regional trade pacts are good things because it increases the power of the region’s economy. But talking about RCEP, he said, "I think India has taken the right decision by not joining it. It’s a China-led agreement and we know what China has been up to. Should we join an agreement which is led by China after seeing the idiocy it has committed? How fair has been China to other countries whether it’s Japan, South Korea or Australia? We have seen what China has been doing in the seas and has been trying to protect its market by not allowing others to sell their goods to China”.
"Perhaps, the Indian government has diligently done a cost output analysis and after analysis, it has found out that it was not good to join the deal," Jindal added.
RCEP is essentially a China-led initiative for a regional trading bloc that will comprise one-third of the world’s population and 29 per cent of the world’s GDP.
A regional trading bloc is essentially a co-operative union where a group of countries agree to protect its member nations from imports of other non-members. The purpose of this trading partnership is to give preferential treatment for trade between the member countries either through lower tariffs, preferential market access, customs union or free trade in specific sectors.
