A year after India pulled out of the Regional Comprehensive Economic Partnership (RCEP), fifteen Asia Pacific countries on Sunday, 15 November, signed the world’s biggest trade deal in terms of GDP, giving an unique edge to China, reported Agence France-Presse.
The mega trade deal, which includes Asian powerhouses like China, Japan South Korea, apart from New Zealand and Australia, is the largest as its 15 member countries account for 30 percent of the world’s GDP.
The trade deal, which was first proposed in 2012, was signed at the end of the Southeast Asian Summit, does not include the United States and is widely being seen as an effort by Beijing to fill up the leadership vacuum left by the US in global trade talks.
What the Trade Deal Entails
According to AFP, following the virtual signing, Chinese Premier Li Keqiang said “Under the current global circumstances, the fact the RCEP has been signed after eight years of negotiations brings a ray of light and hope amid the clouds.”
Lower tariffs and opening up of services trade between member states are some of the features of the trade deal that member states are banking on in order to revive their respective economies, that have been devoured by the coronavirus pandemic.
The deal is expected to reduce costs as companies can export products anywhere within the block, without having to meet separate requirements and clearances for each countries.
Why India Pulled out of RCEP
According to AFP, India had pulled out of RCEP on 4 November 2019, fearing that “cheap Chinese goods are entering the country.” Although India can join the trade deal at a later stage, RCEP covers around two billion people, even in India’s absence.
According to a Bloomberg report dated 4 November 2019, a Foreign Ministry official had said that New Delhi’s decision to abandon the deal was “guided by the impact it would have on the lives and livelihoods of all Indians, especially vulnerable sections of society.”
“India had significant issues of core interest that remained unresolved...India has participated in good faith in the RCEP discussions and negotiated hard with a clear-eyed view of our interests.”Foreign Ministry Official Vijay Thakur, as quoted by Bloomberg.
(With inputs from Agence France-Presse and Bloomberg)
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