India's Withdrawal of RCEP Trade Deal is Seemingly Coming Closer to Reality

India’s Withdrawal of RCEP Trade Deal is Seemingly Coming Closer to Reality

Concerns have been rising that India has made up its mind about withdrawing from negotiations on the Regional Comprehensive Economic Partnership (RCEP). The 16-nation regional free trade agreement involving India, China, Japan, New Zealand, Australia, South Korea, and all ten countries are belonging to the Association of Southeast Asian Nations (ASEAN). These 16 nations account for half the global population and 30% of the global trade.

When India initially announced its withdrawal from RCEP negotiations over insufficient safeguards for its domestic industry, other countries viewed it as a tactic to get everyone to agree with India’s position. As days went by and statements from various government representatives justified the government’s decision, it has been concluded that India was not bluffing in the matter.

Japan is acting to bring India back to the negotiating table as it believes that with a population of 1.3 billion and a growing economy, it’s impossible to envision an RCEP without India.

Japan’s Economy, Trade and Industry Minister Hiroshi Kajiyama said that he would visit India on Tuesday and Wednesday to persuade it to reconsider its decision. The minister also said that he would impress on the Indian government the need to get all nations to sign RCEP in 2020. Japanese PM Shinzo Abe, who is expected to visit India from Dec 15–17, will also try to get India to re-join the negotiations on RCEP.

Indian government fears that RCEP in its present form could lead to flooding of Indian markets by cheap Chinese products, which would affect local industries adversely.

Indian PM Narendra Modi also said as much though he did not explicitly name China, at the leaders meet on November 4 when India announced its withdrawal.

Japan is concerned that India’s withdrawal would lead to China dominating the RCEP, which would relegate it to the sidelines. Japan has a maritime dispute with China in the South China Sea and is regarded with suspicion by China due to its closeness to the US. Thus, Japan must have a country like India in the RCEP as a counter to China.

India is holding onto its demand for introducing safeguards in RCEP to prevent flooding and dumping of goods from any country. The continued standoff has resulted in China, and some ASEAN countries are reconciling themselves to create RCEP without India.

India is also asking for relaxation in visa rules to allow Indian IT professionals easier access to jobs in RCEP countries. It includes only English speaking countries like New Zealand and Australia. So, Japan has a limited say in the matter. This provision is essential because India’s main export is its soft power that is its skilled human resource. As visa procedures become more stringent in the US and EU amid the demands of giving jobs to locals rather than to foreigners, it has become necessary for India to search for greener pastures in other countries.

If other countries come around to China’s view on creating RCEP without India, Japan feels like it will be in the minority and may be forced to tag along with the others to create the regional grouping.

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