Why India Pulled Out Of RCEP And How The Deal Will Benefit China: An Expert Explains

Akshita Jain
·2-min read
This image made from a teleconference provided by the Vietnam News Agency (VNA) shows the leaders and trade ministers of 15 Regional Comprehensive Economic Partnership (RCEP) countries on November 15, 2020.
This image made from a teleconference provided by the Vietnam News Agency (VNA) shows the leaders and trade ministers of 15 Regional Comprehensive Economic Partnership (RCEP) countries on November 15, 2020.

On Sunday, 15 countries signed the Regional Comprehensive Economic Partnership (RCEP) agreement, raising several questions about India’s decision to walk out of the world’s largest trading bloc last year.

External affairs minister S. Jaishankar defended the government’s decision this week, saying that joining the pact would have resulted in “fairly immediate negative consequences” for the country’s economy. He also said that India withdrew from RCEP as a number of key concerns flagged by it were not addressed.

The RCEP deal comprises 10 member countries of the Association of Southeast Asian Nations (ASEAN) along with China, Japan, South Korea, Australia and New Zealand.

India still has the option of joining the agreement. Any country can join RCEP 18 months after it comes into force but India, being one of the initial negotiating countries, can join at any time.

Arpita Mukherjee, professor at Indian Council for Research on International Economic Relations (ICRIER), told HuffPost India in an email interview that in her opinion, India walked out of the agreement because of its trade imbalance with China and a fear that it will only increase if tariffs are reduced under RCEP. The geo-political tensions with China could be another reason, she said.

India’s trade deficit with China was $48.66 billion in 2019-20, according to government data.

Relations between India and China have soured since the Ladakh standoff and the violent face-off in Galwan Valley on 15 June, in which at least 20 Indian soldiers died.

Several reports noted that RCEP can also be seen as a way for China to draft the trade rules in the region and increase its influence (see here and here).

Mukherjee said that China was an important player in regional trade even before RCEP, but it now has an advantage vis-à-vis India in the 14 markets that are part of the agreement. “It also has more bilateral agreements in the region than India. So definitely, Chinese companies will be at an...

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