THE WORLD'S LARGEST TRADING BLOC JUST INKED THE DEAL TO CEMENT THEIR RELATIONSHIP. AMONGST THE ELITES OF ASIA-PACIFIC, A NOTABLE ABSENTEE WAS OBSERVED: INDIA. HERE'S WHY.
While the global economies try to recover from the fallout of the pandemic, China engineered an eight-year-long negotiation to formulate the Regional Comprehensive Economic Partnership (RCEP) encompassing 15 major economies across the Indo-Pacific. The agreement includes 30% of the global population as well as the global GDP making it the biggest trade bloc in history.
THE MISSING GIANT
Till 2019, India looked set to join the bloc. However, the Modi government pulled out abruptly from the negotiations. India's external affairs minister, S Jaishankar recently told Zee News that the key reasons behind New Delhi`s decision to remain out includes inadequate protection against import surge, insufficient differential with China, possible circumvention of rules of origin, keeping the base year as 2014 and no credible assurances on market access and non-tariff barriers. The recently added antagonism against China would have added fuel to their fire of rejection. It seems like the Indian government fears an "import implosion" from their neighbours which can have a detrimental effect on their domestic industries, The Minister stressed on trade deficit which is rightly higher with other RCEP members. And it seems like Delhi's trepidations are justified.
Another reason could have been food sovereignty. RCEP would have exposed the fragile agri market to foreign competitors. This could have disrupted millions of farmers when a splurge of imports would reduce the price of various crops & agri-products. For example, dairy products from New Zealand & Wheat from Australia.
THE FLIP SIDE
Every coin has two sides. It is important to have a look at what India will lose by NOT joining RCEP. First & foremost, it loses unhindered access to the lucrative markets of ASEAN & Indo-Pacifi where income is on the rise and thirst for more exports would only increase in the near future. Another important ascept to be noted is of increased co-operation between member nations. The Indo-Pacific is rapidly becoming a geopolitical hotspot and in such a maelstorm, it is important to have as many reliable allies as possible. For instance, all the members of ASEAN now have friendly bilateral relations (except Cambodia & Vietnam) after the formation of the bloc in 1967. India would have loved to deepen ties with the likes of Japan & Australia but alas! RCEP has a healthy mix of high, middle & low income nations, which bodes well as there would be the presence of a manufacturing hub (Vietnam), an agricultural giant (New Zealand & Australia especially in Dairy farming), a service sector powerhouse (India would have slotted right in) as well as a tech titan (China & Japan). This assiduous mix could have provided the required propellant to fire off the Indian economy as it would have slowly integrated with its member nations.
THE ENSUING CHAOS
The future may look very different if India could manage to sign a Free Trade Agreement with the EU (an onerous task) or even with NAFTA. For now, all are talking about economic recovery but soon the tide will change. If India wants to reclaim the tag of world's fastest growing economy, it will have to act swiftly. Elsewhere, the simple fact that the world's largest trading bloc is lead by Beijing should ring alarm bells in Washington. America cannot afford to cede more ground to the aggressive Chinese after Trump's disasterclass. The success rate of RCEP will determine whether the current trend of :deglobalisation" & rise of right wing nationalism will gain momentum or whether the the ethos of free trade & a unified world will be the popular norm.
THE WINDS OF CHANGE ARE BLOWING. WHAT ABOUT YOU?