mega-trade-bloc-rcep-takes-off

India will have to re-apply for membership

  • The Regional Comprehensive Economic (RCEP), a mega trade bloc comprising 15 countries led by China, that came into existence now ,said India would have to write expressing “intention” to join the organisation to restart negotiations for membership.
  • In a statement after the initialising ceremony among member-countries on the sidelines of the 37th ASEAN Summit held virtually, the newly formed organisation laid down the path for restarting discussions and said “new” developments would be taken into consideration when India re-applied.
  • “The RCEP signatory states will commence negotiations with India at any time after the signing of the RCEP Agreement once India submits a request in writing of its intention to accede to the RCEP Agreement to the depository of the RCEP Agreement, taking into consideration the latest status of India’s participation in the RCEP negotiations and any new development thereafter,” declared the RCEP, which comprises the 10 ASEAN members and Australia, China, Japan, South Korea and New Zealand. The China-backed group is expected to represent at least 30% of the global GDP and will emerge as the largest free trade agreement in the world. The mega trade bloc is a landmark initiative, which is expected to boost commerce among the member-countries spread across the Asia-Pacific region.
  • Prime Minister Narendra Modi addressed the ASEAN Summit on November 12 and highlighted the necessity for peace and stability in the region but maintained silence regarding RCEP, indicating India’s difficulty in welcoming the China-backed grouping. India’s ties with China in recent months have been disturbed by the military tension in eastern Ladakh along the LAC. In the meantime, India has also held maritime exercise with Japan, Australia and the United States for the “Quad”, interpreted as an anti-China move. However, these moves did not influence Japanese and Australian plans regarding RCEP.
  • Experts are interpreting the beginning of RCEP as a major development that will help China and trade in Asia-Pacific region in the post-COVID-19 scenario.

‘Leverage for China’

  • The agreement means a lot for China as it will give it access to Japanese and South Korean markets in a big way, as the three countries haven’t yet agreed on their FTA.
  • The fact that this happened, despite the pandemic, is certainly leverage for China, and shows the idea of decoupling from China is not a substantive issue in a regional sense.
  • While the door remains open for India to join, there was “a degree of cynicism” among trade representatives in the region after how the negotiations turned out. Except perhaps with Australia and Japan, there is a sense that India increasingly turning inward doesn’t connect with a region looking to come together.
  •  “India will also have to consider if the new U.S. administration revives the Trans-Pacific Partnership trade deal in some form and brings in all of its partners in the region, can India afford to stay out of a template that excludes China, at the same time as it is looking to move out supply chains from China in the next 5 or 10 years?”