New Delhi: After days and months of suspense, India Monday said it would not join the ASEAN-led mega trade deal Regional Comprehensive Economic Partnership (RCEP) even as the member countries decided to address New Delhi’s concerns and bring it on board by next year.
Prime Minister Narendra Modi made the announcement in Bangkok during his speech at the third RCEP Summit, which was attended by leaders of all the member countries.
“India conveyed its decision at the summit not to join the RCEP agreement. This reflects both our assessment that current global situation as well as fairness and balance of the agreement, India had significant issues of core interest that remained unresolved,” said Secretary (East), Ministry of External Affairs, Vijay Thakur Singh.
The RCEP is being negotiated between 16 countries, that includes the 10 ASEAN members — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam — and their six trade partners — Australia, China, Japan, South Korea, New Zealand and India, which has now opted out.
At the summit, Modi said his decision was guided by the impact the RCEP would have on the “lives and livelihood of all Indians, especially vulnerable sections of the society”.
“In the given circumstances, we believe that not joining the agreement is the right decision for India…We took the right decision in national interest,” secretary Singh said.
While all the 15 countries have concluded their negotiations, it is only India that failed to finalise the talks despite “serious efforts” made by all member countries, sources told ThePrint.
Sources also indicated that the main reason why the talks fell apart was because India could not make significant progress in trade in services under the proposed pact. This means, India could not negotiate its access for its professionals such as engineers, doctors, journalists and IT employees to the markets of the member countries.
According to sources, other reasons behind the negotiations falling apart are — inadequate protection against import surge, differences over tariff structure with China on goods, possible circumvention of rules of origin, keeping the base year as 2014, and no credible assurances on market access and non-tariff barriers.
India has been facing stiff opposition from its industries and the farming community over the RCEP, mainly due to China and the over $60 billion trade deficit that New Delhi has with Beijing.
Countries to ‘work together’ to bring India on board
Meanwhile, leaders of all the participating countries stated that they would “work together” to resolve India’s concerns.
“India has significant outstanding issues, which remain unresolved. All RCEP participating countries will work together to resolve these outstanding issues in a mutually satisfactory way. India’s final decision will depend on satisfactory resolution of these issues,” the statement said.
The statement also mentioned that the 15 countries have concluded text-based negotiations for all the 20 major chapters that deal with market access issues. The negotiations will now undergo legal scrutiny by each of the countries in order for them to sign the agreement next year.
Earlier in the day, Chinese Vice Foreign Minister Le Yucheng said 15 countries decided to move ahead first.
“The text-based negotiations have been completed and issues of market access have been essentially concluded,” he said. “Whenever India is ready, they are welcome to come on board,” he added.
This is the reason why the 15 countries did not sign the deal Monday and decided to wait until 2020, sources said.
New Delhi’s decision has upset Tokyo
It was Japan that had brought India on board the RCEP talks way back in 2012 when the negotiations for the deal began. At that time, China, which continues to remain the main driver in the deal, wanted to have the trade partnership with the ASEAN countries and Japan only.
The talks were begun by Beijing as Asia’s answer to US-led mega trade pact known as Trans-Pacific Partnership, which was later dumped by US President Donald Trump.
New Delhi’s decision to not join the RCEP has upset Tokyo much more than any other member country, according to a source.
The issue was also discussed during the bilateral meeting between Japanese Prime Minister Shinzo Abe and Modi which took place before the RCEP summit.
Both leaders are expected to discuss it later this year again when Abe comes to India for the India-Japan annual summit.