What is RCEP(Regional comprehensive economic partnership)?
RCEP is an agreement put forward by Beijing in 2011 to promote, free trade of goods and services, e-commerce, small and medium enterprises, foreign investment between countries and to open up our countries to global products and services without heavy tariffs or restrictions by government.
Asian pacific countries amount for 30% of global GDP(value of goods and services produced in a country) that means they are responsible for major portion of manufacturing and services out of which China and India alone make up for half of it. The negotiations on this agreement have been going on since 2012 and were finally finalized in 2019 and signed in 2020. 16 countries were asked to be a part of this deal( Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, China, Japan, India, South Korea, Australia and New Zealand).
Why did Beijing put forward this deal to Asian pacific countries and specifically excluded USA?
We can say our global leaders have tendency to behave like children. In 2005 USA introduced an agreement for free trade with some asian countries like Vietnam and Malaysia called Trans pacific parternship and excluded China from it since the leaders of USA and China have never seen eye to eye on economic issues. If trans pacific partnership was put into motion it would’ve been a big deal for USA, they would’ve been the leaders of global trade and have a good control over it. But USA feared some issues that come with this like income inequality, loss of jobs in local manufacturers, more trade deficits(imports>exports), etc.(Among Trump’s first few decisions as president was to stop this deal, and he did)China’s intentions behind this deal could be good or could be to capture global trade and rule it. This agreement is implemented to plan trade for the next 20 years.
What would signing RCEP would have meant for India?
Pros- Indian market would’ve been open for international goods at lower prices(low or negligible tariffs). Indian exporters would’ve much bigger market to expand their businesses and promote Indian products globally increasing our foreign reserves. Easier movement of technology and intellectual properties( imagine South korean and japanese inevtions in India). It would be easier for Indians to provide services to these countries and get international services at doorstep as well. Could be closer to perfect market competition with competitive prices and quality which always leads to customer satisfaction.
Cons- Chinese goods flooded in our market. Local manufacturers would suffer to keep up to their prices and quality of international goods. Trading with western countries and middle east could become difficult if political issue arises in countries part of RCEP and other global economies. Farmers of India can suffer if Japanese agriculture technology is brought here because still a major part of population is dependent on agriculture and the transition is slow.
Why opting out of RCEP could be modi’s biggest blunder?
India’s goal was that manufacturing should caccount for 25% of gdp by 2022, so far no progress has been seen, it has dipped below though. Indian economy has always have been labour economy and it’s decision to promote manufacturing(make in India) is gonna be hella difficult with such high rates for loans and so difficult funding. China has equally big labour market but they get business loans at 5% p.a. to promote such growth, here the government just can’t stop feeding themselves. Our market needs to be open to global economies to promote competition and to promote Indian people to grow and improve quality of our goods. A closed economy might as well be an island with no resources. We need a trading bloc to grow, RCEP could’ve been our opening to growth.
You all were told that export of medicines and PPE Kits was not allowed during lockdown, but modi’s affiliation with ambani’s and adani’s ports and businesses were exporting them to other countries at high prices and pocketing the profits. With our PM only supporting Industrialists and tycoons there’s no chance for common people to grow.
Please don’t be ignorant towards government’s decisions and raise your voices.
For your opinions or comments or questions about RCEP, comment!!