Rcep 2019: The member countries of the Regional Comprehensive Economic Partnership-RCEP have set November 2019 as the deadline for preparing the final draft. Under this, a final decision will be taken on the major agreements / treaties of RCEP and membership of countries.
What is RCEP?
- The Comprehensive Regional Economic Partnership (RCEP) will be the largest free trade agreement in the world. It will have a total of 16 member countries, including 10 ASEAN countries and 6 other countries including India, China, Australia, New Zealand, Japan and South Korea.
- Half of the world’s population lives in these 16 countries group and the total GDP of the world. He holds one-third stake in the company.
- Mutual trade between these countries constitutes more than one-fourth of the world’s total trade.
- Negotiations between the countries have been going on since 2012, but no decision has been taken on it unanimously.
Feedback on Trans-Pacific Partnership
In 2015, 12 countries related to the Pacific Ocean signed an economic partnership. At that time it was being led by America. In addition to other objectives of this partnership, the US wanted to strengthen its position in the Pacific Ocean region in response to China’s policies. On this basis, China was kept out of this partnership. But it is worth noting that after the change of power in America, the Trump administration separated America from this agreement. In response to the TPP, China attempted to create a Comprehensive Regional Economic Partnership (RCEP) by combining the countries of the Indo-Pacific, although negotiations for this partnership have been going on since 2012, but it accelerated after the TPP. However, it is interesting to understand that the four countries of the TPP are also member countries of the RCEP, as well as New Zealand, the TPP’s depository country, is also a member country of the RCEP. With the US exit from the TPP and the participating countries of this agreement joining the RCEP, it has been decided that economic issues are far more important in the current round of preemptive policy.
Protectionism in the name of liberalism
In the era of globalization, various countries are entering into agreements. The main goal of these agreements is to increase the trade progressively by removing tariffs and non-tariff barriers. But these agreements are not only between two countries but also between countries related to a particular region. European Union, ASEAN, TPP and RCEP can be seen as prime examples. These types of organizations jointly create a common market but do not extend these facilities to other non-member countries. Due to this, the world is getting divided into different factions. Concern has also been expressed by the WTO on this. Some economic analysts see this as new protectionism, which is driven by a group of different countries replacing one country.
Potential benefits in favor of India
- The agreement will provide stability to trade relations between its member countries.
- Due to the free trade agreement between its partner countries, they have to keep their markets open for investment and trade.
- Indian industry, especially IT And service sector companies will get new markets. This will create new employment opportunities.
Potential challenges for India
- In the event of an ongoing trade war between China and the US, India’s involvement in this agreement will show that India is in favor of China.
- This will have a negative impact on the recent bilateral trade agreement India has with the US.
- At present, India is at a huge trade deficit with China. This is having a negative impact on India’s domestic industries. After the implementation of RCEP, India will have to reduce the import duty from China by 80 percent, which will further increase the trade deficit.
- Under this agreement, India will have to reduce the import duty by 86% from Australia and New Zealand and 90% from ASEAN countries, Japan and South Korea.
- India’s major concern under RCEP concerns e-commerce companies and their investments. According to this, the government cannot force an investor company to transfer technology. As a result, Indian companies will be left behind in global market competition.
- Foreign companies investing in India will instead remit money to their shareholders in India in their country of origin.
- E-commerce is also being discussed under this agreement, if this discussion forms part of the agreement then it may put a halt to India’s data localization plan.
How important is RCEP for India?
The RCEP is an effort to increase trade between member countries under an agreement. It includes 16 countries in the Indo-Pacific region including India. Together these countries contribute one-third to world GDP. At present, this agreement is undergoing negotiations and a clear program is being prepared for trade in it. Some economic experts believe that this agreement is not beneficial for India. The deal will provide more benefits to China, which India is already grappling with a highly unfavorable trade balance. Additionally, countries like Australia and New Zealand will replace India’s dairy products. There are also other issues that can harm India’s domestic market. However, it is also not appropriate for India to stay away from a partnership like RCEP as it would put India out of the competition in a big market. It is worth noting that the RCEP makes provision for levying equal tariffs for non-member countries.
Make in india and rcep
The possibility has been expressed that the RCEP may play an important role in making India’s Make in India program a success, but there remains controversy over the above idea. If India joins RCEP, it will face cheap products manufactured by China, Japan and Korea. Currently India’s domestic product is not able to withstand the above mentioned countries due to lack of skill in India’s supply chain management. In order to make Make in India a success, it is necessary that the government should give more protection to the program. The RCEP 2019, which is a free trade agreement, is likely to have extremely negative effects on the program. India also needs to consider this.
Road ahead Rcep 2019
India should interact with representatives of various industries and related institutions of the country before finally joining the RCEP. We need to build a consensus by removing the doubt prevailing in this agreement. India will have to take a firm decision in the case of RCEP. It would be unprofitable for us to stay away from this agreement or to join it late because India will be out of the formulation and discussion of RCEP 2019 policies in the beginning.
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