RCEP Current Affairs - 2020

India withdraws from RCEP

On November 4, 2019, India decided against joining Regional Comprehensive Economic Partnership (RCEP) trade deal as India did not receive any credible assurance on market access and non-tariff barriers. This paved way for the other 15-members to go ahead and sign the deal keeping the door open for India to join at later date.

Reasons of Withdrawal

Trade Deficit

India has trade deficit with at least 11 of 15 RCEP countries. It has doubled in the last five years from 54 billion USD in 2013-14 to 105 billion USD in 2018-19. Of this China alone accounts to 53 billion USD. Signing the RCEP will widen trade deficit and will empty foreign exchange reserve of India at a faster rate.

Domestic market

Australia and New Zealand are now in search of free access to market their diary products. Similarly Indonesia and Vietnam are looking for places to dump their less quality rubber. India being the largest market in the world, dumping such less expensive goods will affect domestic goods of India

The China Factor

The RCEP deal is in favor of China. China is now looking for greater access (as an alternate) to Indian market with the trade war with the US. A failure to find an alternate will have a cascading effect on Chinese economy and its global ambitions. India by not signing the RCEP deal has refused to be a willing dumping ground of China’s trade imperialism.

PM Modi meets Indonesian President and Thailand PM

PM Modi on the sidelines of 35th ASEAN summit and 14th East Asia Summit, met the President of Indonesia H.E. Joko Widodo and the Thailand PM Prayut Chan-o-Cha (Gen (retd)).

Highlights of the meetings: Indonesia President

  • The leaders discussed the threat to extremism and terrorism and agreed to work closely. The meeting on terrorism is important for India’s interests in the Indo-Pacific region.
  • Also, they discussed on trade, investment and connectivity and Indo-Pacific
  • India has asked for greater market access in the region in the fields of pharmaceuticals, agricultural products and automotive.
  • The meeting also gains its importance as India and Indonesia are celebrating their 70th anniversary of establishment of diplomatic relations. The countries are close maritime neighbors having historical and cultural linkages. Also India’s ‘Act East Policy’ is complimented by Indonesia’s ‘Look West’ policy.

Highlights of the meetings: Thailand PM

  • The leaders welcomed the 20% increase in the bilateral trade between the countries
  • They agreed to explore opportunities for cooperation in defence industries sector
  • PM Modi discussed ways to enhance connectivity between the two countries in the areas of digital connectivity and physical connectivity.
  • India and Thailand are close maritime neighbors. India’s Act East Policy is complimented by the Thailand’s Look West Policy as that of Indonesia.