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Regional Comprehensive Economic Partnership (RCEP)

Regional Comprehensive Economic Partnership (RCEP)

Context:

Regional Comprehensive Economic Partnership (RCEP) came into existence on the sidelines of the 37th ASEAN Summit. RCEP  is a mega trade bloc comprising 15 countries led by China.

Regional Comprehensive Economic Partnership (RCEP):

  • It is the world's largest free-trade bloc which is comprised of 10 ASEAN members, South Korea, China, Japan, Australia, and New Zealand.
  • RCEP will account for 30% of the global economy, 30% of the global population, and reach 2.2 billion consumers.
  • The deal marks the first time rival East Asian powers China, Japan, and South Korea have been in a single free trade agreement.
  • RCEP will help reduce or remove tariffs on industrial and agricultural products and set out rules for data transmission.
  • The mega trade bloc is a landmark trade initiative that is expected to boost commerce among the member-countries spread across the Asia-Pacific region.

India's stand on RCEP:

  • India withdrew from RCEP in November 2019 over concerns about cheap Chinese goods entering the country.
  • India raised alarm about market access issues, fearing its domestic producers could be hard hit if the country was flooded with cheap Chinese goods.
  • India highlighted that the present form of the RCEP agreement does not fully reflect the basic spirit and the agreed guiding principles of RCEP.

RCEP's stand on India:

  • The RCEP mentioned that India would have to write expressing “intention” to join the organization to restart negotiation for membership.
  • The RCEP signatory states will commence negotiations with India at any time after the signing of the RCEP Agreement once India submits a request in writing of its intention to accede to the RCEP Agreement to the depository of the RCEP Agreement.

Importance of RCEP to China:

  • The RCEP may cement China's position more firmly as an economic partner with Southeast Asia, Japan, and Korea.
  • The existence of RCEP may put the world's second-biggest economy in a better position to shape the region's trade rules.
  • The RCEP could help Beijing cut its dependence on overseas markets and technology, a shift accelerated by a deepening rift with Washington.
  • The United States is absent from both RCEP and the successor to the Obama-led Trans-Pacific Partnership (TPP), leaving the world’s biggest economy out of two trade groups that span the fastest-growing region on earth.

Source: The Hindu