India and RCEP (Regional Comprehensive Economic Partnership).

[YAGAY andSUN]

India has not ratified the Regional Comprehensive Economic Partnership (RCEP) of China due to a variety of economic, geopolitical, and strategic concerns. The RCEP, which includes 15 countries from the Asia-Pacific region, was signed in November 2020, but India chose to withdraw from the agreement before its ratification.

Here are some key reasons why India did not ratify the RCEP:

1. Concerns Over Trade Deficits

India has long faced a trade deficit with China, which means that India imports more from China than it exports to China. India's trade deficit with China was one of the primary reasons for not joining the RCEP. India feared that by ratifying the agreement, it would worsen the trade imbalance, especially considering the unfavorable trade terms that might benefit Chinese exports more than Indian exports.

2. Protection of Domestic Industries

India has several sensitive sectors such as agriculture, dairy, and certain manufacturing industries that could have been adversely impacted by the removal of tariffs under RCEP. Indian policymakers were concerned that the agreement would open the floodgates to cheap imports, particularly from China, which could overwhelm Indian industries and harm domestic jobs. India sought to protect sectors that were still in the process of developing and needed time to become competitive on the global stage.

3. Geopolitical Concerns

India's strategic rivalry with China, particularly in the context of border tensions and ongoing security issues in areas like Ladakh, has made it difficult for India to align closely with China on a multilateral economic platform. India's decision not to join RCEP was also influenced by its desire to counterbalance China's growing influence in the Indo-Pacific region and to maintain its independent foreign policy.

• Border tensions: The India-China border standoff in 2020, which led to violent clashes and the loss of lives, significantly worsened bilateral relations and increased the reluctance of Indian policymakers to engage economically with China under the RCEP framework.

4. Concerns Over Market Access and Intellectual Property

India was concerned about the lack of adequate protections for its industries and the inadequate enforcement of intellectual property rights (IPR) in the RCEP agreement. Indian negotiators were also apprehensive about the fact that the agreement did not offer sufficient market access for Indian services (such as IT and pharmaceuticals) in China and other RCEP member countries. India’s service sector is a major contributor to its economy, and it wanted better terms for its services exports.

5. Protection of Agricultural Interests

Indian agriculture and dairy sectors are highly sensitive, and India feared that the RCEP would open these sectors to competition from countries with much more advanced agricultural industries, particularly Australia and New Zealand. India wanted to avoid situations where the free movement of goods under RCEP would lead to a surge of cheap agricultural products, threatening the livelihoods of millions of farmers in India.

6. Domestic Political and Public Opinion

At the time of negotiations, there was strong domestic opposition to India joining the RCEP, especially among various trade associations, political parties, and the general public. Concerns over the deal’s impact on jobs, the economy, and national interests led to strong resistance. Indian farmers, manufacturers, and small businesses voiced their objections, leading to widespread skepticism about the benefits of the RCEP for India.

7. Need for More Balanced Terms

India had raised concerns about imbalanced trade provisions and sought greater concessions from RCEP members, particularly China. India demanded stronger commitments on areas like trade in services, market access, and IPR protection, but it did not receive assurances that would have made the agreement more beneficial to Indian exporters. Consequently, India decided that the terms of the agreement did not serve its national interest.

8. Focus on Bilateral Agreements

Rather than joining the broader RCEP, India has expressed interest in pursuing bilateral trade agreements with individual countries like the United States, Australia, and the European Union. These agreements allow India to negotiate terms that are better suited to its economic and strategic goals, without compromising on sensitive sectors.

9. Economic Impact of COVID-19

The COVID-19 pandemic added another layer of uncertainty to the global economy. Many countries, including India, were focused on domestic recovery and managing the impact of the pandemic. In this context, India’s decision to stay out of the RCEP was also driven by the need to prioritize domestic economic stabilization over international trade agreements that might involve greater exposure to external competition.

Conclusion:

India’s decision not to ratify the RCEP of China was shaped by a combination of economic, political, and strategic concerns. The country sought to protect its domestic industries, manage trade deficits, address geopolitical tensions, and safeguard sensitive sectors like agriculture. While India recognizes the importance of engaging in regional trade, it chose to pursue other trade partnerships and negotiations that better align with its long-term interests.