Trade is one of the five ‘T’s the Modi government banks on for resurrecting ‘Brand India’. The forthcoming national trade policy should reflect the government’s priorities in this regard. The priorities should also show up in the ongoing trade negotiations, one of the most important of which is the Regional Comprehensive Economic Partnership (RCEP).
The RCEP is the largest trade deal that India is negotiating with countries of the Asia-Pacific. With more than 3 billion people, a third of the world trade, and an aggregate market of more than $20 trillion, the RCEP is a mega deal involving the 10 ASEAN economies and Australia, China, India, Japan, Korea and New Zealand. The negotiations have finished four rounds and would be entering their fifth round in Singapore during June 23-27. The negotiations are expected to conclude by the end of 2015.
India has bilateral FTAs with several of the RCEP members, including the ASEAN bloc, Japan and Korea. Within the ASEAN, India has agreements with Singapore, Malaysia and Thailand. None of these existing agreements, however, de-prioritise the RCEP in any way. The simple reason being RCEP, in totality, presents a much larger market than any of the bilateral deals that India has. It includes Australia, New Zealand and, of course, China—three major markets in the APEC that India would gain preferential access once the deal concludes.
It is not only market access that matters. The RCEP is significant for India in a couple of other respects. First, the framework is a stepping-stone for India to get a deeper and firmer entry in the economic architecture of the Asia-Pacific. This is the first opportunity that India has to contribute meaningfully to the evolution of new trade and business rules in the Asia-Pacific. The significance of this for Indian producers and businesses eyeing greater presence in the regional supply chains can hardly be overstated.
Second, through the RCEP, India can effectively mount a campaign for becoming a member of the APEC group of economies. India’s retrograde foreign policies and lesser attention towards the Asia-Pacific ensured that it never became a key strategic player in the region. Its presence in the East Asia Summit (EAS) has been largely peripheral. But now it has a chance to redeem.
The RCEP has seven members that are also negotiating the Trans-Pacific Partnership (TPP). These include Australia, Brunei, Japan, Malaysia, New Zealand, Singapore and Vietnam. Korea’s impending entry in the TPP would increase