Is Modi following Trump's footsteps in staying out of RCEP trade deal?
Negotiations to unite 16 Asian countries in a trade deal — called Regional Comprehensive Economic Partnership (RCEP) — that will put certain standards in place for the overall good of every country and boost commerce by lowering tariffs, have been going on since the past six years.
On 4 November 2019, the country leaders met in Bangkok, Thailand, to hash out the final details, and all came to an agreement on the trade deal terms — except India.
Modi did not agree to the deal saying, “‘Whenever I try and gauge India’s interest in light of her joining RCEP, I do not get an answer in the affirmative; neither Gandhiji’s policy of self-reliance nor my wisdom allows me to join RCEP.”
The reasons cited by the Indian government were that of adverse and unbalanced trade terms; although critics of the decision say this is simply a protectionist PR strategy.
Modi is known to not give candid interviews to media, and questions regarding which terms were unfair have not been disclosed.
All 15 other countries have been reported to go ahead with the RCEP. With the final details hashed out, the trade deal will go through “legal scruffing” and is expected to be signed in 2020.
The RCEP was to unite the 10 member nations of ASEAN — namely Brunei-Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam — and the 6 countries they had made deals with: Australia, China, India, Japan, Korea, and New Zealand.
The idea was that while each ASEAN country enjoyed relations with one or more of the above six, RCEP would enable all 16 countries to work together under a unified structure.
However, Modi’s rejection of this on the basis that is was unfair for its SMEs and farmers, does raise eyebrows as to the future of the economy as the 15 others continue forward. While the South West Asian country is a power in itself, it has been receiving ire from the international community, especially Trump, for not opening its trade borders enough.
Trump pulled a similar stunt in 2017 by backing out of the Trans-Pacific Partnership (TPP) and applying punitive tariffs on countries citing “unfair trade practices” as reasons. The actions led to tariffs on goods from the European Union, and marked the beginning of the on-going US-China trade war that has upset businesses in the two countries.
Having said that, there is light at the end of the tunnel. While the other countries have moved forward with the deal, they have left the door open for India to join at a later stage. India could take advantage of this to build stronger ties with the west.