India refuses to sign up for RCEP; says its core concerns remain unresolved

India has decided not to join the Regional Comprehensive Economic Partnership (RCEP) pact saying it will not “compromise” on its core issues.

But other RCEP members, including the ASEAN bloc, China, Japan, South Korea, Australia and New Zealand, are keeping the door open for New Delhi if it decides to join at a later date once its concerns are addressed.

“India has conveyed its decision not to join the RCEP agreement... India had significant issues of core interest that remained unresolved. The country has participated in good faith in the RCEP discussions and had negotiated hard with a clear eyed view of our interests. In the given circumstances, we believe not joining the agreement is the right decision,” said Vijay Thakur Singh, Secretary (East), Ministry of External Affairs, addressing a press conference in Bangkok after the RCEP Summit.

Other RCEP members, though, want India to keep its options open. “India has significant outstanding issues, which remain unresolved. All RCEP participating countries will work together to resolve these outstanding issues in a mutually satisfactory way. India’s final decision will depend on satisfactory resolution of these issues,” the statement said.

The statement also said that fifteen RCEP countries (all members other than India), had completed the negotiations for the RCEP agreement and would sign the deal next year. “We noted 15 RCEP participating countries have concluded text-based negotiations for all 20 chapters and essentially all their market access issues, and tasked legal scrubbing by them to commence for signing in 2020,” the statement said.

Guided by impact: PM

Prime Minister Narendra Modi, in his speech at the Summit, said that his decision of not joining the agreement was guided by the impact that it would have on the lives and livelihoods of all Indians, especially the vulnerable sections. He referred to Mahatma Gandhi and his advice on recalling the face of the weakest and poorest and asking if the steps being considered were of any use to them.

Growing opposition

One of the reason for India’s decision to not join the trading bloc was the growing agitation against the pact not just from the Indian industry but also from farmer groups. Representatives from a large number of industrial sectors, ranging from steel and engineering goods to textiles and plastics, had asked Commerce and Industry Minister Piyush Goyal to protect them against zero-tariff imports, especially from China.

The All India Kisan Sangharsh Coordination Committee (AIKSCC), a forum of over 250 farmers organisations from across the country, has been aggressively protesting against the RCEP for the past few weeks stating that cheap imports would destroy the dairy sector as also vegetable and fruit growers.

The Swadeshi Jagran Manch, the economic wing of the RSS, had also asked Prime Minister Modi not to lead India into the RCEP as it would spell doom for the Indian industry, especially the small sector.

A number of oppos)ition political parties, including the Congress, had asked the government to go slow on the deal and take into consideration all the pros and cons.

Lose-all proposition

“The main problem with the RCEP pact was that it was too ambitious for India’s good. As part of the agreement, India would have had to eliminate import duties on 80-90 per cent items over a period for which our industry and farmers were not prepared. Moreover, India was not getting anything in the area of services. So, it was a lose-all proposition for India,” a Delhi-based trade expert told BusinessLine .

What made the problem worse for India was that RCEP members were not agreeing to the safeguards it had proposed, in the form of stringent rules of origin and safeguard tariffs, to protect against a possible surge in imports. This proved to be the deal-breaker.

Despite protests from stakeholders, India had continued with the negotiations as the RCEP would have resulted in the world’s largest free trade bloc. The 16 members together account for 39 per cent of global GDP, 30 per cent of global trade, 26 per cent of global foreign direct investment flows, and 45 per cent of the total population.

COMMENT NOW