India turns away from the world’s biggest trade agreement.
Regional Comprehensive Economic Partnership (RCEP) which is a free trade agreement between Asian- Pacific nations Signed on November 15th 2020 at the 37th Association of Southeast Asian Nations virtual ASEAN summit hosted by Vietnam. Around 15 member countries namely Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New-Zealand, the Philippines, Singapore, South Korea, Thailand and Vietnam are accountable for about 30% of world’s population which is around 2.2 billion people and 30% of Gross Domestic Product that is around 6.2 trillion dollars as of 2020, this makes it the history’s biggest trade bloc. It aims for a modern, high-quality, comprehensive, mutually beneficial economic partnership agreement among the above mentioned states and it’s free trade agreement. There are around four largest economies in Asia out of which China, Japan and South Korea are 3 among them, therefore RCEP is the first biggest free trade agreement between these countries.
According to the Singapore premier “The RCEP is a major step forward for the world, at a time when multilateral is losing ground and global growth is slowing”.
India’s relationship with ASEAN acts as a major key of its foreign policy and as a base of the Act East policy. India and ASEAN trade and investment bonding has a steady growth as ASEAN is the fourth largest trading partner of India.India and ASEAN trade stands at 81.33 billion dollars which includes approximately around 10.6% of overall trade while exports stands at 11.28% of total exports.
India is a country with leading consumer driven markets. India opened around 74 % of its market ASEAN countries. But it turned away from the world’s biggest trade agreement that is concerned with elimination of tariffs leading to a flood of imports that would affect the local producers. According to our Prime Minister Narendra Modi, India decided to withdraw as this could impact the lives and livelihoods of society’s vulnerable sections.
China plays a vital role as a major source of imports and a major destination for exports for most of the membered nations. Hence India withdrew from signing China-backed RCEP trade agreement while the other 15 nations signed the pact.
Even after India’s withdrawal, official’s said that it may rejoin if it wishes to be a part of the world’s biggest trade. According to the statement of the Prime Minister of Singapore, they have joined as fellow RCEP countries with a hope that at some point of time India may change its decision and rejoin as it believes that India’s participation would completely reflect the emerging patterns of integration and regional cooperation in Asia.