India’s decision to keep out of the virtual signing of the world’s biggest free-trade deal, the Regional Comprehensive Economic Partnership (RCEP), has divided opinions. Pushed over the finish line by China, the RCEP brings together 2.2 billion people in 15 countries, including advanced economies like Japan, South Korea, Singapore, Australia and New Zealand and weaker players like Cambodia and Laos. Despite its unexpected pullout from negotiations nearly a year ago, India has been given a special fast-track procedure should it wish to join the RCEP, which accounts for 29 percent of the global GDP. Australia and Japan are still particularly keen that India should join the RCEP as a counterweight to China, which will clearly be the dominant force for the foreseeable future. Now, though, due to the Ladakh standoff, it’s very unlikely that India will join the RCEP any time soon.
Ladakh aside, India’s reluctance to signing up was also because of the fear that the country would be deluged by cheap Chinese products that would destroy small industries, killing jobs and hurting the poor. The availability of cheap Chinese products has already been hurting certain sections of the trading community. With the economy already slowing sharply pre-Covid, political parties, including the Congress, which was an original RCEP proponent, too were unusually united against the deal. Moreover, India has always run huge trade deficits with China and its free trade pacts with other ASEAN countries haven’t met the expectations. It would probably also be unwise to subject many Covid-hit Indian companies to a blast of fresh competition when they’re still recuperating from the pandemic. Overall, for now it seems a good decision to keep out of the RCEP.