RCEP 

• It is an economic agreement formed by the Association of Southeast Asian Nations (ASEAN) and their Free Trade Agreement (FTA) partners. 
  • • 10 ASEAN countries: Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos, and Vietnam.
    • 5 FTA partners: China, Japan, South Korea, Australia, and New Zealand.
• It is the world's largest trading bloc established to promote economic integration, trade liberalization, and cooperation among its members.
• RCEP member countries collectively accounted for more than 30% of global GDP and about one-third of the world population.
• The RCEP negotiations started in 2012, officially signed in November 2020, and came into effect on January 1, 2022.

Objectives

• Promoting trade and investment among member countries.
• Reduce or eliminate tariffs and non-tariff barriers to promote seamless trade.  

India Participated in RCEP but withdrew

• India was initially involved in the RCEP negotiations, but withdrew in 2019 due to several concerns:
• India's decision was in line with the global "China Plus One" strategy, which aims to diversify trade and supply chains, and reduce dependency on China.
• There was concern about the arrival of low-cost Chinese products, which could harm domestic industries.
• India was concerned that joining the RCEP would increase its trade deficit, as seen in other member countries, such as ASEAN's growing trade deficit with China. 
  • • ASEAN's trade deficit with China grew from USD 81.7 billion in 2020 to USD 135.6 billion in 2023.
    • India's trade deficit with China had already reached $ 85 billion in 2023-24 raising concern that RCEP would increase the imbalance.
• India was concerned about rules of origin provisions, worried that goods could avoid Indian tariffs by passing through other countries.
• There were concerns about the impact on domestic industries, especially dairy and steel, as they could face stiff competition as tariffs were to be reduced from 35% to zero.
  • • India wanted to protect its domestic industries from being stressed by cheaper imports from countries such as Australia and New Zealand.

PRACTICE QUESTION

Q.Critically analyze the main concerns behind India’s withdrawal from Regional Comprehensive Economic Partnership (RCEP).  (250 Words)