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Asia-Pacific countries sign world's biggest free trade deal

Vietnamese Prime Minister Nguyen Xuan Phuc, left, and Minister of Trade Tran Tuan Anh, right, applaud next to a screen showing Chinese Premier Li Keqiang and Minister of Commerce Zhong Shan holding up signed RCEP agreement, in Hanoi, Veitnam. China and 14 other countries have agreed to set up the world's largest trading bloc. (Photo: AP)Premium
Vietnamese Prime Minister Nguyen Xuan Phuc, left, and Minister of Trade Tran Tuan Anh, right, applaud next to a screen showing Chinese Premier Li Keqiang and Minister of Commerce Zhong Shan holding up signed RCEP agreement, in Hanoi, Veitnam. China and 14 other countries have agreed to set up the world's largest trading bloc. (Photo: AP)

  • Given that many RCEP countries including Singapore were keen that New Delhi should join the pact, the invitation to keep the door open for India to join the RCEP at a later date is not surprising

NEW DELHI : Fifteen Asia-Pacific countries that signed what is billed as the world's biggest free trade deal on Sunday left the door ajar for India to join the grouping saying that the pact was open for accession by New Delhi and that members would start talks with Asia’s third largest economy when it indicates its willingness to join the grouping.

In the meantime, India could participate in deliberations of the Regional Comprehensive Economic Partnership (RCEP) -- that includes 10 Southeast Asian economies along with China, Japan, South Korea, New Zealand and Australia – as an observer.

It could also participate in economic cooperation activities undertaken by the RCEP signatory states under the RCEP Agreement, “on terms and conditions to be jointly decided upon by the RCEP signatory states," a statement by the grouping posted on its website said.

“Expressing their strong will to re-engage India in the RCEP Agreement, the RCEP Ministers affirmed that the above mentioned arrangements will commence on the date of the signing of the RCEP Agreement, and will continue until India accedes to the RCEP Agreement," it said.

Given that many RCEP countries including Singapore were keen that New Delhi should join the pact, the door kept open for India to join the RCEP at a later date is not surprising. Many Southeast Asian nations including Singapore and Vietnam see India as a counterweight and balancing factor against China despite their strong economic links with Beijing.

“#RCEP is an Indonesia and ASEAN-initiated and -led negotiation process. India is key country of Indo-Pacific that participated in negotiations from Day 1 and significantly shaped RCEP today," Indonesian ambassador to India Sidharto Suryodipuro said in a Twitter post on Sunday.

Analysts in New Delhi however questioned the timing of signing the pact, given that China was seen as to be intimidating its neighbours in Southeast Asia.

Signing the pact buys into the Chinese view that countries in the region are depend on it economically, said Kanwal Sibal, former foreign secretary. “The pact feeds into China’s economic strength" which in turn it projects politically like in the South China Sea, he said. It will be now more difficult to contain China politically and strategically, he said. The pact also includes Australia and Japan, countries that were looking at diversifying supply chains away from China, in the aftermath of the covid-19. And comes in the wake of China’s economic bullying of Australia, Sibal pointed out referring to a series of measures Beijing had taken against Canberra earlier this year including high tariffs against Australian agricultural products after Canberra called for an international inquiry into the source of the novel coronavirus that first surfaced in China last year.

India had last year refused to join the grouping citing reservations that goods manufactured by China could come into India through third countries under the RCEP, exacerbating its already skewed trade with China. India had also said that it was reviewing free trade deals that it had struck in the past given that these had not worked in its favour. Indian industry had also apprehended greater market access to China could harm key manufacturing sectors like steel and textiles. India also had concerns about giving greater market access to other non-FTA partners like Australia and New Zealand.

Indian foreign minister S Jaishankar had recently explained the rationale behind India’s rethink of joining pacts like the RCEP pointing out that India had entered into arrangements with short term calculations in the pursuit of globalization.

In the past, “India imported to consume, trade, and profit rather than to absorb, innovate and produce. The over-leveraging of low cost options from outside obviously eroded domestic manufacturing. Not coincidentally, despite fairly high economic growth, India’s employment challenges also started worsening," Jaishankar said.

“The consequences of this on sustaining demand and promoting production unfolded over time. Quite unconsciously, we began to perceive in the efficiencies of others a solution for our own limitations….That many others, including in our near proximity, had raced ahead always had explanations. By the second decade of this century, these realities have caught up with us. It has led to a growing realization that globalization without a strategy is like driving without a destination," he said while delivering the Sardar Patel Memorial Lecture on 31 October.

Biswajit Dhar, a professor of trade relations at the New Delhi based Jawaharlal Nehru University concurred with Jaishankar’s view that free trade pacts India signed in the past had not brought the desired benefits. If India joins “RCEP at this stage, it will be inconsistent" with the “government’s current priority of boosting manufacturing," he said.

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