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India ASEAN to expand trade despite RCEP walkout

Topics Covered: India and its neighbourhood- relations.

India, ASEAN to expand trade despite RCEP walkout:

Context:

India and ASEAN countries said they would explore ways to increase trade between them despite India’s exit from the 15-nation Regional Comprehensive Economic Partnership (RCEP) agreement.

What is the RCEP?

  • The Regional Comprehensive Economic Partnership is a free trade agreement originally devised to consist of 16 countries across the Asia-Pacific region.
  • However, it is now expected to be signed on November 15, between China, Australia, South Korea, Japan, and 10 Association of South East Asian (ASEAN) nations.
  • The pact looks to drop tariffs and duties between the members so that goods and services can flow freely between them.

India and the RCEP:

May 15 was the deadline for a response to a fresh proposal of India rejoining negotiations on the Regional Comprehensive Economic Partnership (RCEP).

Why India didn’t sign?

  1. India’s trade deficit with the RCEP nations is $105 billion, of which China alone accounts for $54 billion. Further relaxations would enhance the deficit.
  2. The worry is also over Chinese manufactured goods and dairy products from New Zealand flooding Indian markets, hurting domestic interests.
  3. The trade agreement was also seen as being detrimental to the government’s Make in India initiative.
  4. India was looking for specific rules of origin to ensure the trade pact wasn’t abused by non-partner countries and an auto-trigger mechanism to protect it from a surge in imports.
  5. Ecommerce and trade remedies were among other key areas of concern that failed to find satisfactory redressal.
  6. India has expressed its concerns over lowering and elimination of tariffs on products from other countries, as it would negatively affect the domestic agricultural and industrial sector.
  7. India was also worried about keeping 2014 as the base year for tariff reductions.

RCEP

InstaLinks:

Prelims Link:

  1. RCEP- composition and objectives.
  2. India’s free trader agreements with ASEAN countries.
  3. India dairy sector.
  4. Geographical location of asean countries.

Mains Link:

Discuss why India did not join the RCEP.

Sources: the Hindu.