If implemented as planned, it would become the world’s largest trading bloc, catering to almost 50 per cent of the world’s population, with a combined GDP of almost $ 50 trillion. The Regional Comprehensive Economic Partnership envisages an FTA to open the markets of the 10 ASEAN nations, along with the three largest Asian economies—China, India and Japan—as well as Australia, South Korea and New Zealand, into a mega regional trading bloc. PricewaterhouseCoopers estimates that the combined GDP of the RCEP member states is likely to reach nearly $250 trillion by 2050, with the total GDPs of China and India making up more than 75 per cent of the amount.
First mooted at the 19th ASEAN Summit held in November 2011, the idea gained traction, with some 24 rounds of talks and negotiations so far. Yet plans to finalise the contours of the pact by the end of the year fell through at the summit in Singapore Wednesday, which was attended by leaders from all prospective member states, including Prime Minister Narendra Modi.
Though the leaders put up a brave front, saying that the process was now irrevocable and it was just a matter of working out a few remaining issues, the fact remains that India and a few other nations have legitimate concerns over opening up their markets to China, a move that could put their domestic markets at risk.
Realising that it could not afford to be excluded from regional trade chains, particularly when it is actively pursuing its ‘Act East’ policy, India joined this initiative to ramp up its trade integration with the region. But Indian industry is deeply concerned over tariff concessions, and the lack of access for its services sector.
Then, the fact remains that India already has trade deficits with 10 of the RCEP countries, particularly China with whom it has a whopping $63 billion trade imbalance. Unless these issues are addressed first, joining the RCEP will mean drooling over short or medium-term benefits while ignoring the long-term peril.