Another Strategic Union
After staying out of the Regional Comprehensive Economic Partnership (RCEP) – a Free Trade Agreement (FTA) signed by China and 14 other Asia-Pacific nations on November 15, 2020, India has hinted that it would bolster trade ties with the US and the EU in the coming days.
Earlier, the Chinese State Media slammed India’s decision to not join the world’s largest trading bloc, stating that New Delhi would miss the bus to economic development by not joining the RCEP. Beijing claimed that together, they accounted for around 30% of the world’s GDP and population.
Meanwhile, Indian Minister of External Affairs Dr Subrahmanyam Jaishankar has defended New Delhi’s decision, saying that FTAs with the US and the EU would be more beneficial to India than RCEP! He also said that China-backed Trade Agreement failed to address India’s concerns. Dr Jaishankar recalled that India had clearly mentioned in November 2019 that the RCEP would pose a threat to the circumvention of rules of origin because of tariff differentials. According to the Indian Minister, FTAs with the US and the EU countries, which have large markets, would create an environment suitable for competitive trade.
A senior Indian official, too, has backed the External Affairs Minister’s view, stressing: “ASEAN countries will not be competitive for India. One of our main objections to RCEP negotiations was how certain rules can easily be circumvented to give Chinese products and services an unfair advantage.” He further said that India “had sought for fair agreement on the trade deficit and opening of services’ norms”. The official has predicted that the RCEP Deal could bring down the import duties on goods by up to 90%, thus, allowing markets to be flooded by imports. It could also trigger a larger trade deficit!
Experts are of the opinion that the RCEP could be considered as China’s Strategic and Diplomatic success to counter India’s Look East Policy! Earlier, India had planned to strengthen trade ties with the South-East Asian Region. However, the RCEP has prompted India to look at the West, once again! Keeping in mind India’s deteriorating diplomatic ties with Italy in recent years, experts have said that it would be really difficult for the South Asian Nation to sign new FTAs with the EU. As far as the US is concerned, everything depends on President-elect Joe Biden’s India Policy.
So far, China has successfully stamped its authority in the Asia-Pacific and South-east Asian Regions, and has cornered India in its own backyard. Now, it has become a challenging job for India to boost trade ties with the rest of the world, especially in post-COVID situation.
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