It offers India a chance to put to use learnings from earlier trade agreements
#TOI Editorials
Prime Minister Narendra Modi’s itinerary during his current visit to Singapore includes a leaders’ meeting of Regional Comprehensive Economic Partnership (RCEP), a proposed trade deal between 16 countries including India and China. When concluded, it will span a combined population of 3.6 billion generating GDP of about $25 trillion. Enhancing cross-border trade has served the world well and been a positive force in India’s economic development. Nevertheless, recent developments in global trade make the current phase of RCEP negotiations particularly tricky.
Chinese mercantilism followed by the hostility of the Trump administration to past multilateral trade agreements have changed the dynamics. Unfazed by the US pullout from Trans-Pacific Partnership (TPP), the remaining members reached an agreement which will take effect next month. China, which is not a part of the reworked TPP, has perhaps not been under as much pressure in recent memory. RCEP thus provides a promising opportunity to get China to adhere to a tighter rules-based trade framework. This is in India’s interest. Based on the experience gained from earlier free trade agreements, India is also in a position to carefully choose tariff lines which can benefit the most from a closer regional integration.
RCEP has triggered anxiety as its member states are the source of most of India’s trade deficit. Among the negotiating parties it’s China which really worries both Indian industry and sections of the government. The anxiety is understandable but RCEP should be seen as an opportunity to rectify earlier mistakes. A successful trade deal offers enough benefits to all partners to risk the costs. By taking a comprehensive look at potential costs and benefits in both goods and services and negotiating skilfully, India can ensure RCEP boosts economic growth as well as enhances competitiveness at home.