15 Asian countries, sans India and Pakistan, sign world’s biggest free trade deal

Ziraat Times Team Report

NEW DELHI : Fifteen Asia-Pacific countries, that include 10 Southeast Asian economies, along with China, Japan, South Korea, New Zealand and Australia, signed RCEP in what is billed as the world’s biggest free trade deal on Sunday.

The Regional Comprehensive Economic Partnership (RCEP) excludes South Asian giant – India – as well as Pakistan.

India had last year refused to join the grouping citing reservations that goods manufactured by China could come into India through third countries under the RCEP, exacerbating its already skewed trade with China. India had also said that it was reviewing free trade deals that it had struck in the past given that these had not worked in its favour. Indian industry had also apprehended greater market access to China could harm key manufacturing sectors like steel and textiles. India also had concerns about giving greater market access to other non-FTA partners like Australia and New Zealand.

In the meantime, India could participate in deliberations of the Regional Comprehensive Economic Partnership (RCEP). It could also participate in economic cooperation activities undertaken by the RCEP signatory states under the RCEP Agreement, “on terms and conditions to be jointly decided upon by the RCEP signatory states,” a statement by the grouping posted on its website said.

“Expressing their strong will to re-engage India in the RCEP Agreement, the RCEP Ministers affirmed that the above mentioned arrangements will commence on the date of the signing of the RCEP Agreement, and will continue until India accedes to the RCEP Agreement,” it said.

Given that many RCEP countries including Singapore were keen that New Delhi should join the pact, the door kept open for India to join the RCEP at a later date is not surprising.

“#RCEP is an Indonesia and ASEAN-initiated and -led negotiation process. India is key country of Indo-Pacific that participated in negotiations from Day 1 and significantly shaped RCEP today,” Indonesian ambassador to India Sidharto Suryodipuro said in a Twitter post on Sunday.

Signing the pact buys into the Chinese view that countries in the region are depend on it economically, said Kanwal Sibal, former foreign secretary.

“The pact feeds into China’s economic strength” which in turn it projects politically like in the South China Sea, he said. It will be now more difficult to contain China politically and strategically, he said.

The pact also includes Australia and Japan, countries that were looking at diversifying supply chains away from China, in the aftermath of the covid-19. And comes in the wake of China’s economic bullying of Australia, Sibal pointed out referring to a series of measures Beijing had taken against Canberra earlier this year including high tariffs against Australian agricultural products after Canberra called for an international inquiry into the source of the novel coronavirus that first surfaced in China last year.

Indian foreign minister S Jaishankar had recently explained the rationale behind India’s rethink of joining pacts like the RCEP pointing out that India had entered into arrangements with short term calculations in the pursuit of globalization.

In the past, “India imported to consume, trade, and profit rather than to absorb, innovate and produce. The over-leveraging of low cost options from outside obviously eroded domestic manufacturing. Not coincidentally, despite fairly high economic growth, India’s employment challenges also started worsening,” Jaishankar said.

News Agencies