India to make a renewed push for an important regional trade treaty that will create the world’s largest trading bloc
- Suresh Prabhu, the Union Minister for Commerce and Industry, will be participating in negotiations for the
Regional Comprehensive Economic Partnership(RCEP) in Singapore.
- The trade ministers of 15 other countries in the region will meet to discuss ways to move forward with the
free tradetreaty, which requires all signatories to eliminate around 90% of tariffs with one another.
- In August 2018, India decided against pulling out of the RCEP despite fears that it would be compelled to grant more market access to China if it were to sign the treaty.
Trade ministers of 15 other countries in the region will meet to discuss ways to move forward with the free trade treaty, which requires all signatories to eliminate around 90% of tariffs with one another.
If ratified, the trade treaty would enable the creation of the world’s largest trading bloc, covering around 40% of global trade. Given its particular emphasis on free trade in services and cross-border movement of labour, the agreement is of major significance to India, since it derives 55% of its GDP from the services sector, according to the commerce ministry.
In August 2018, India decided against pulling out of the RCEP despite fears that it would be compelled to grant more market access to China if it were to sign the treaty. As Prabhu heads to Singapore, he will continue to lobby for specific restrictions with respect to China, with which India has a burgeoning trade deficit. These include a request for a longer time period over which to eliminate tariffs with China.
India’s objections have reportedly led to a delay in the collective signing of the treaty. Exactly 24 multilateral discussions on the RCEP have taken place so far, with the previous round coming at the end of October in New Zealand. At the Auckland round, India’s request for a specific arrangement with China was shot down by other countries.
The RCEP is an important component of India’s Act East Policy as it dovetails with the country’s existing free trade deals with ASEAN members and will help Indian companies, especially those in IT and professional services, become more integrated in regional production networks.
India is expected to do what it can to ensure the conclusion of the trade deal. This will, however, require compromises on its part.
The latest RCEP talks come alongside the ASEAN Summit, which is being attended by India’s Prime Minister
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