RCEP is a proposed free trade agreement (FTA) between ASEAN and six Indo-Pacific states. RCEP is the world’s largest economic bloc, covering nearly half of the global economy. The chief objectives include the spirit to strengthen economic linkages and to enhance trade and investment related activities as well as to contribute to minimising development gap among the parties.

The grouping envisages regional economic integration, leading to the creation of the largest regional trading bloc in the world, accounting for nearly 45% of the world’s population with a combined gross domestic product of $21.3 trillion.

Significance of RCEP:

• RCEP is the world’s largest economic bloc, covering nearly half of the global economy.
• RCEP will provide a framework aimed at lowering trade barriers and securing improved market access for goods and services for businesses in the region.
• RCEP’s share of the global economy could account for half of the estimated $0.5 quadrillion global GDP (PPP) by 2050.
• The grouping envisages regional economic integration, leading to the creation of the largest regional trading bloc in the world.
• RCEP recognises the importance of being inclusive, especially to enable SMEs leverage on the agreement and cope with challenges arising from globalisation and trade liberalisation.
• Analysts suggest that there are enormous export gains that could accrue to India from RCEP under varying scenarios. This assumes even greater importance since our focus has been on products with favourable terms of trade for India.
• India endeavours to integrate with a region, which has been the most successful region of the world in terms of thriving regional value chains (RVCs). These RVCs necessitate freer movement of professionals across countries in the region.
• This is especially crucial in a scenario when the vector of India’s demographic dividend is concomitant to the vector of the “aging” population in most RCEP countries.

However, there are views that in present form the RCEP agreement is not good for India.

• The current account deficit (CAD) touched 8 per cent of GDP, and the agreement in the present state of negotiations would mean forgoing a substantial part of the revenues.
• Greater access to Chinese goods may have impact on the Indian manufacturing sector. India has got massive trade deficit with China. In fiscal year 2017-18, the trade deficit with China was $63 billion.
• Under these circumstances, India proposed differential market access strategy for China.
• Exports from ASEAN into India have grown far quicker than Indian exports to the bloc, which they attribute to the fact that India is a “services economy.”
• There are demands by other RCEP countries for lowering customs duties on a number of products and greater access to the market than India has been willing to provide.
• Apart from China, India is also losing out to financial and technological hub of Singapore, agriculture and dairy majors Australia and New Zealand, plantations of South East Asian countries, and pharmaceutical trade with China and the US.
• With e-commerce as part of the discussion, the Indian resistance at WTO of not letting the discussion on digital trade will weaken.
• The free movement of investments will benefit investors in the US, Singapore, Japan and China, but very few Indians will be taking advantage of this.
• New Delhi is also worried that the RCEP will open backdoor negotiations and may lead to the country losing out on TRIPS agreements. This may result in giving way to global majors in agriculture seed and pharmaceutical manufacturing.

Conclusion:

 Bilateral talks between India and China are crucial for an early conclusion of RCEP negotaiations as agreed by other members. Indian policymakers need to be mindful of domestic sectors’ concerns before agreeing on terms of deal. Simultaneously, there is a necessity to improve our competitiveness in the economy. India must play its due role to get its due place in the regional economic configurations.