Context: India and ASEAN countries said that they would explore ways to increase trade between them despite India’s exit from the 15-nation Regional Comprehensive Economic Partnership (RCEP) agreement.
More on the news:
- Indian PM had also called for an “early review” of the ASEAN-India Trade in Goods Agreement (AITGA), and “underlined the importance of diversification and resilience of supply chains for post-COVID economic recovery.”
- He also announced a $1 million contribution to the ASEAN COVID-19 recovery fund.
- Indian PM also said that speeding up all types of connectivity initiatives between India and ASEAN - physical, economic, social, digital, financial, maritime - is the top priority for India.
- India has decided not to join the Regional Comprehensive Economic Partnership (RCEP) trade deal saying it did not get any “credible assurance for India on market access and non-tariff barriers.
- The RCEP free trade agreement is expected to be signed on November 15th, between China, Australia, South Korea, Japan, and ten Association of South East Asian (ASEAN) Nations.
Issues for India
- The e-commerce chapter & the issue of cross-border transfer of electronic information.
- If implemented it would prevent India from implementing Data Localisation rules.
- Also, Reserve Bank of India’s (RBI) in its April 2018 notification mandated all system providers to ensure that the entire data relating to payment systems operated by them are stored in a system only in India.
- Hurt domestic industries: RCEP members want India to eliminate or significantly reduce customs duties on the maximum number of goods traded globally.
- No Auto Trigger Mechanism
- Auto trigger mechanism: To protect domestic industry against surge in imports, India suggested an auto trigger method that would automatically increase import levies once shipments cross a given threshold limit.
- Relaxing of Services trade whereas India wants greater market access.
- Investor-state dispute settlement
- It gives exclusive right to bypass domestic legal systems
- Rules of Origin (ROO)
- These are the criteria used to define where a product was made. India wants strict Rules of origin to prevent Chinese Goods from flooding the country.
- Ratchet Obligations: India wants exemptions on ratchet obligations.
- It signifies that the governments have to freeze their current levels of market opening, and if they liberalise more they cannot go back.
- ASEAN is India’s fourth-largest trading partner with about $86.9 Bn in trade between India and the ten ASEAN nations:
- It comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
- However, experts have warned that once the FTA is adopted, trade between RCEP nations will assume primacy, which could affect trade ties with other countries including India.
Regional ComprehensiveEconomic Partnership
It is a grouping of the 10 countries of ASEAN with Australia, New Zealand, South Korea, India, China and Japan.
- RCEP will constitute more than 40 per cent of the global population and almost half of the world's economy.
- It consists of three of the six largest economies of the world, especially, the two fastest growing large economies namely India and China.
Source: The AseanPost
Image Source: TH