India does not want to join largest trade pact in Asia-Pacific
India on Monday refused to join the Asia-Pacific Trade Pact (RCEP), which will form a major trade bloc with the region’s leading economies and will cover nearly a third of the world‘s gross domestic product..
The Regional Comprehensive Economic Partnership was an agreement between the 10-member Association of Southeast Asian Nations (ASEAN) and six of its major trading partners: China, Japan, South Korea, India, Australia and New Zealand. Trade pact negotiations began in 2013, and India’s reluctance to open its markets has over time become one of the main obstacles to its ratification.
Vijay Thakur Singh, a Foreign Ministry diplomat in charge of India’s relations with East Asia, said on Monday that India had chosen not to join the RCEP agreement. Pact leaders held a series of summits in Thailand, including the 35th ASEAN Summit.
«This reflects both our vision of the current global situation and our assessment of the fairness and balance of the agreement, Singh told reporters in Bangkok during a press briefing. – India had significant issues of prime interest that remained unresolved».
«In these circumstances, we believe that not joining the agreement is the right decision for India. We will continue to persevere and strengthen our trade, investment and community relations in the region», – Singh stated.
She declined to elaborate on what some of these major unresolved interests represented, but added that the participating countries were aware of them. Singh also did not say if India would consider joining the trade pact at a later date..
«Despite significant concessions and offers of security measures from China, India remains concerned about the potential growth of Chinese imports and, it claims, a lack of progress in its offensive interests, in particular in market access for services.», – say analysts of the political consulting company Eurasia Group.
India is already facing difficult economic conditions: economic growth is slowing, many of its sectors, including manufacturing, are experiencing difficulties, there are difficulties in creating enough jobs..
The trade agreement is due to be signed next year, Thailand said. The text of the RCEP agreement is said to have been finalized and is pending legal review before member countries sign the document.
Analysts say worries over the ongoing U.S.-China trade war, rising U.S. protectionism and the global economic downturn have added momentum to the talks..
«As trade tensions continue to dominate the global agenda, Asia must look deeper and strengthen regional integration to sustain and drive growth», – said Priyanka Kishore, Oxford Economics.
She explained that reaffirming the free movement of goods, services and capital in the region would help keep ASEAN central to world trade. This will increase economic opportunity, support job creation within countries, and help countries maintain sustainable growth over the long term. Kishore, like other experts, has previously stated that participation in RCEP will help India to better integrate into global supply chains..
Eurasia Group analysts added that under the RCEP, market access, especially services, and regulatory requirements will be easier than under the Comprehensive and Progressive Trans-Pacific Partnership Agreement – a trade pact that replaced the Trans-Pacific Partnership after United States withdrew from this agreement.
«This limits the economic benefits of the transaction, especially in the short term; India’s absence from the pact will also weaken the benefits», – analysts note, adding that the medium-term effect will be significant as barriers to market access are gradually decreasing.