Editorial Notes

India's refrain from RCEP put wisdom over braggadocio: The Statesman

In its editorial, the paper says that India's signing of the Regional Comprehensive Economic Partnership (RCEP) would alienate its domestic constituencies, which the Modi government could hardly afford.

A man waving an Indian national flag at the Jharkhand State Cricket Association stadium in Ranchi, India, on Oct 20, 2019.
A man waving an Indian national flag at the Jharkhand State Cricket Association stadium in Ranchi, India, on Oct 20, 2019.PHOTO: AFP

NEW DELHI (THE STATESMAN/ASIA NEWS NETWORK) -Trade isolation is never a pleasing thought, yet it is pleasing that India ignored the hawks within the government's pet think tanks and chose not to sign up for the China-backed Regional Comprehensive Economic Partnership (RCEP) deal.

There is little doubt that signing the deal would have amounted to "Free Trade Agreements (FTAs) by stealth" with countries which India has forbidding trade imbalances with.

Much is being said about being a part of the world's largest value chain, which the 10 Asean members and their six trade partners - Australia, China, India, Japan, South Korea and New Zealand - are seeking to create through the free trade pact.

The 10 members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

However, major realisations are needed to inform Indian thinking before binding global agreements are entered into.

It is just as well that the Indian opposition, including Rashtriya Swayamsevak Sangh (RSS) affiliate Swadeshi Jagran Manch, persuaded the government to put wisdom over braggadocio and refrain from joining the 16-country chorus in Bangkok and wait for a more appropriate times.

While it is all very well to talk of India ensuring complementary and long-term sustainability while signing, New Delhi has been bereft of expertise for negotiating complex agreements and has sold itself short in the past.

Past FTA utilisation rate is no more than 25 per cent, merchandise trade deficit with Asean countries has risen to $14.6 billion (S$19.8 billion), import duties foregone are an overwhelming $10.3 billion and deficits traumatise not only trade with South American customs union Mercusor but with African countries as well.

Given that India's trade and agriculture communities (that are already reeling under financial stress) would literally go under, courtesy of treacherous RCEP clauses, the Modi government could hardly afford to alienate its domestic constituencies.


The RCEP promises to embrace half the global population, a quarter of the global gross domestic product (around $50 trillion) apart from trillions of dollars in trade, but what concerns India more is how it leaves its position via-a-vis China.

For instance, New Delhi runs a $53 billion deficit while China continues to threaten most small manufacturers and producers, including farmers, with its low-priced exports.

Despite his bonhomie with Beijing, Mr Narendra Modi said as much after refusing to put ink to paper, expressing dissatisfaction over the lack of openings that Indian services and producers would find after the deal, while conceding that India believes in "a mutually beneficial RCEP".

However, if the message for the world is that India's lucrative 1.2 billion strong market deserves special attention, there is an equal message for India; that there can be no beneficial integration without competitive strength, which is a function of both manufacturers and improved governance around all factors of production: land, labour, capital and organisation.

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