The Regional Comprehensive Economic Partnership ie RCEP was signed by 15 countries on Sunday. These 15 countries account for 30 percent of the world’s GDP, so it is the largest trade agreement in the world. India was involved in RCEP negotiations since 2013, but withdrew from the deal in November last year due to disagreements over some issues.
Also read: ASEAN, China and other countries signed world’s largest trade agreement
The deal is seen as a major success for China. It is believed that this will further increase China’s economic influence. This is the reason that India is also talking of reviewing the Free Trade Agreement with the RCEP member countries. India feels that its backdoor market for China’s products will open up for free trade.
What is RCEP?
It is a free trade agreement between 15 countries and will make it easier for member countries to do business with each other. Under this agreement, member countries will either not have to pay taxes on imports or exports or will have to pay very little. Its member countries include China, Japan, South Korea, Australia and New Zealand in addition to 10 ASEAN countries.
Why did India withdraw from it?
India feels that it does not have adequate provision to curb the increase in imports. India’s trade deficit with China is already high and RCEP could have worsened India’s position. Farmers and traders organizations of India were also opposing this agreement saying that if we join it, these already troubled sections will be completely destroyed. One aspect is that after the agreement, the way Indian companies would get a big market, the companies of other countries would also get a big market like India. In such a situation, all other countries, including China, would start selling their goods in the Indian market at cheaper prices, and this would have caused domestic Indian producers trouble.
Fear of many organizations related to dairy products
All dairy-related organizations, including Amul, feared that due to RCEP, dairy products from New Zealand and Australia would fill the Indian market and this would adversely affect the domestic dairy industry. There was also a demand from India that the base year should be shifted to the future from 2014 onwards, but this was not accepted. However, the path for India to join RCEP has not stopped. Other countries will have to wait to be part of this agreement, but India can join it whenever it wants. The agreement will have to be implemented within two years by the member countries.