At a time when multilateral trade is under threat anyway, FTAs and RTAs are the only way forward.
Given the exact contours of the deals being hammered out at RCEP were never made public, it is difficult to make a reasonable assessment of whether India did the right thing by—for now only?—not joining RCEP, or whether, as in the past when Indians opposed the Dunkel Draft, this will lead to increased protectionism that will leave the country weaker. Ironically, just last week, the HLAG report on exports warned against rising protectionism in India; a country that, thanks to protectionism, is not competitive cannot, in the long run, even compete against imports.
The dairy industry, we learned from furious op-eds in newspapers, would be wiped out by cheaper milk from New Zealand; for some reason, there was no explanation for why India couldn’t act against this if it was dumping. Nor was there any discussion on what stopped India’s dairy industry from getting more competitive. Steel producers, similarly, were worried about getting hit by cheaper imports from RCEP, and most industry was worried about what would happen as China got easier access to the Indian market.
It is possible that all the fears were justified, and India has done well to bargain for greater safeguards, just as China bargained for more time when it joined the WTO. The question to ask, however, is whether the government could have used RCEP, as we did with WTO in the past, to drive meaningful local reform, especially since poor local policies are responsible for India’s low competitiveness. And, if India’s dairy industry would be hit, perhaps its cereals and fruit and vegetables would benefit; trade policies can’t be dictated forever by the losers. At a time when multilateral trade is under threat anyway, FTAs and RTAs are the only way forward. India can choose to stay out completely, but there is no such thing as the perfect deal. Keep in mind that, even as India keeps away from RTAs/FTAs, its balance of trade continues to be under pressure as cheaper imports—including smuggling—find it easy to out-compete an industry that chooses not to grow up.