India on Monday (Nov 4, 2019) has decided not to enter the Regional Comprehensive Economic Partnership (RCEP) agreement due to its geopolitical ambitions.
India has opted to stay out of the RCEP agreement. RCEP is would have become the world’s largest trade pact as it includes countries like China (Worlds biggest economy) and other Association of Southeast Asian Nations (ASEAN) countries. However even without India, RECEP is the worlds largest trade pact.
With this decision of India not to join RCEP agreement, China emerges as the big winner as it holds a huge supply chain networks that link the ASEAN countries. India’s decision of keeping out of RCEP agreement has put an end to the 7-year old negotiations among the RCEP nations.
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RECEP talks started in the year 2012 among India, China, Japan, South Korea and ASEAN’s 10 Member Countries (Indonesia, Thailand, Singapore, Philippines, Malaysia, Vietnam, Brunei, Cambodia, Myanmar (Burma), Laos). Apart from these, Australia and New Zealand were also included in these talks.
The key agenda of this agreement aims at reduction of import duty over 90% of the items, opening of trade services through easy visa rules for investors and professionals.
But from India’s point of view, it may suffer with surge on imports from China which includes re-routing of goods from other RCEP countries. Also, the agreement restricts on applying latest duty or taxes.
India however is looking forward in building bilateral trade deals rather than RCEP agreement. India considers Australia, Japan, Singapore and Vietnam as its key economic partners for trading in this region.
Many economists think that India’s move is a good step which is similar to that of the United States. And internally, Modi government has gained the support of even from the opposition parties.