QUICK TAKE: RCEP
As the ASEAN summit starts today, Indian trade negotiators are seeking to wrap up the 25 chapters of the Regional Comprehensive Economic Partnership (RCEP). The RCEP is a proposed free trade agreement that would include 45% of the world’s population, and 40% of the world’s trade. A breakthrough in the RCEP would be a marked win for trade liberalisation at a time where rising tariffs spurred by nationalism are increasingly becoming the norm.
However, political resistance still remains within India, with officials pointing to the perceived risk of cheap Chinese imports flooding the market. Ashwani Mahajan, co-convener of the Swadeshi Jagran Manch, told Bloomberg: “The RCEP is little more than a free-trade agreement with China, which will be disastrous for Indian businesses. We have spoken with the trade minister and made it clear that India should stay out of this deal.”
As is often the case in trade pact negotiations, farmers in particular are not happy. They have appealed to the freshly formed Modi government to keep agricultural produce and the dairy sector out of the deal.
India’s import of dairy products from China has grown 12% over the period 2012-17 and is projected to grow to a value of US$5.67bn by 2022 (see fig.1). If the RCEP is signed, this figure is likely to increase. India already has an imbalanced level of trade in the sector in comparison with its other trade partners (see fig. 2).
However, if India were to pull out of the deal, it would have to negotiate with countries bilaterally, losing out on the opportunity to gain access to the Chinese market for Indian SMEs and businesses.