India is better off joining rcep

India is better off joining rcep

Now that the Regional Comprehensive Economic Partnership (RCEP) has been formally launched without Indian participation, it is vital that New Delhi join the world’s largest trade bloc sooner rather than later. This is not just because gains from trade are significant but also because membership is a prerequisite to having a say in writing RCEP’s rules to safeguard India’s interests and the interests of several countries that are too small to stand up to the largest member, China. That would be a strategic error.

After all, opting to stay out of RCEP would mean passive acceptance of the trade pact’s norms, and worse. Indian goods and services would face mounting trade and non-trade barriers in the entire Asia-Pacific, even as our competitiveness takes a beating from a lack of economic openness. In the world’s most dynamic region, 15 nations have now signed up for RCEP: the 10-member Asean group, plus their free-trade partners, China, Japan, South Korea, Australia and New Zealand. India does have a free trade agreement with Asean, for both goods and services, but we did opt out of RCEP talks last November, citing ‘significant outstanding issues’. New Delhi surely needs to be more forward looking in terms of trade and openness. Note that RCEP nations already account for about 30% of the world’s economic output, and the figure is likely to grow substantially in the next 2-3 decades. And Indian economic growth would clearly be suboptimal without purposefully leveraging Asia-Pacific demand.

It would be a while before RCEP is officially ratified, and longer still for country-specific tariff reductions to be fixed. Services are outside RCEP — all the more reason for India to be in RCEP and seek access in services. Keeping environmental and labour norms outside RCEP might seem smart, but would deny companies of RCEP members easy access to Europe and the US. Intellectual property (IP) norms are included, and it would be very much in India’s interest to seek transparency in IP and ‘rules of origin’ issues in RCEP.