India refuses to compromise interests; RCEP signing deferred to 2020

In a major decision reflecting India's 'Nation First' policy, India on Monday has refused to join the Regional Comprehensive Economic Partnership (RCEP). The Centre released an informal press note sharing details on how the move will affect India's farmers, MSMEs, and dairy sector. India believes its decision displays its openness to global competition while boosting India’s service sector. The signing of the RCEP has been deferred to next year.

READ | Door will remain 'wide open' for India to join RCEP: Australian PM

India refuses to join RCEP

The Centre stated that the threat of circumvention of Rules of Origin due to Tariff Differential, unviability of MFN obligations and no assurance on  market access and non-tariff barriers had not been addressed in the agreement. PM Modi, in his address, has stated, "The present form of the RCEP Agreement does not fully reflect the basic spirt and the agreed guiding principles of RCEP. It also does not address satisfactorily India's outstanding issues and concerns In such a situation, it is not possible for India to join RCEP Agreement."

He added, "India stands for greater regional integration as well as for freer trade and adherence to a rule-based international order. Our farmers, traders, professionals, and industries have stakes in such decisions. Equally important are the workers and consumers, who make India a huge market and the third biggest economy in terms of purchasing power parity." India first highlighted the concerns with RCEP in 2014.

READ | Oppn leaders meet today to discuss economic issues, RCEP

What is the RCEP?

The Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) between the ten member states of the Association of Southeast Asian Nations (ASEAN) and its six FTA partners, launched in 2012. The member nations include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, and the FTA members include China, Japan, India, South Korea, Australia and New Zealand. The agreement aims at dropping tariffs and duties between the members to allow a free flow of goods and services.

READ | RCEP leaders to issue joint statement on proposed trade pact

What are India's concerns?

India is wary of this agreement, as the Centre feels with the lowering of import duties, the domestic industries will not be able to compete with China and the inflow of goods. The main sectors which would feel the pinch are the milk industry, textile and traders, according to experts. According to reports, the recent slowdown in India's core industry would also affect in case tariffs are lowered.

READ | Piyush Goyal counters Sonia: India joined RCEP negotiations in UPA era