5 years ago

Is India withdrawing from RCEP because of the US?

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At the recent ASEAN summit, the public opinion shock caused by India’s withdrawal from the Third Regional Comprehensive Economic Partnership Agreement (RCEP) is still continuing, given the complexity of Sino-Indian relations and the changes in the international situation. There is a voice that India’s withdrawal is due to concerns about China, and there are voices that India’s withdrawal is to wait for the establishment of a free trade zone with the United States and Europe. Under the intertwined arguments, India’s withdrawal from RCEP is due to what is worth pondering.

Technical consultation is not a problem

Regarding why India withdrew, the RCEP leaders stated that “the important issues in India have not yet been resolved… India’s final decision will depend on the successful resolution of these issues.” Indian Prime Minister Narendra Modi said, “The current RCEP agreement does not fully reflect the basic spirit of RCEP and consistent guiding principles. It does not satisfactorily solve India’s problems and concerns.” It is undeniable that India will join RCEP. The domestic economy, especially some industries, has caused shocks, and Modi cannot ignore these realistic interests.

However, joining RCEP will have an impact on some industries in India. This topic is not the first day. Why did India choose to use its exit to defend its interests until the last moment? RCEP has been negotiating for seven years since it was put on the agenda in 2012. Behind the stop-and-go, the parties are willing to spend more time to make up their differences and are not willing to give up the 16 countries to reach an agreement. India has also hoped to continue negotiations. The issue did not consider withdrawing from the negotiations. Why is the way for India this time to quit? Does India really want to participate in RCEP?

Technical consultation is not a problem

It is worth noting that as early as 2016, the Indian government began to solve the domestic rebound problem. For example, the Board of Trade, which is composed of representatives from all walks of life and chaired by the Minister of Commerce and Industry, has been reorganized and held the first in April 2016.

Meeting. In addition, the Ministry of Commerce and Industry and other government departments also held various forms of RCEP consultations and seminars with the Indian Chamber of Commerce, the Federation of Indian Chambers of Commerce and Industry (FICCI), the Federation of Indian Export Organizations (FIEO), and various industry groups and NGOs.

Recently, the Indian government has also carried out dredging efforts in the country. At the end of September, the government introduced a package of stimulus packages to appease exporters, including tariff reductions on export products to compensate exporters and lower exchange rates for exporters.

In the RCEP negotiations this year, the biggest progress was the 28th round of consultations held in Vietnam on September 30. India’s delay in making concessions was a compromise. India intends to reduce tariffs on members of the agreement, of which 80% of Chinese products can receive preferential treatment. According to the plan, India will immediately cancel the tariff on 28% of Chinese products, and the remaining tariffs on products imported from China will be cancelled in batches within 5, 10 and 15 years.

In the early days, Modi actually had a lot of positive attitudes toward the RCEP negotiations. The media had reported that Modi “finally gave the Indian negotiators a green light to seek a “substantive conclusion” in Bangkok.” India’s Minister of Commerce and Industry Piyush Goyal made a clear statement in an interview with the media in September 2019. He believes that India’s refusal to join RCEP will put “exports at a disadvantage” and that India’s national interests cannot be held by individual industries. Look at “national interests” from a holistic perspective. AK Gupta, director of the Agricultural and Sideline Products Export Bureau of the Ministry of Finance of India, believes that “open-ended India will be more promising because Indian agriculture can join global competition.”

From October 11 to 12 this year, Chinese President Xi Jinping and Modi held their second informal meeting in Chennai, India. At that time, the leaders of the two countries reached a consensus to work together to reach the Regional Comprehensive Economic Partnership Agreement as soon as possible.

From the perspective of consultations, some of the protection mechanisms that India has revisited have actually been resolved. The Hindustan Times quoted Indian officials as saying on October 28 that at the RCEP ministerial meeting in Bangkok in early October, Indian Minister of Commerce and Industry Goyal uncharacteristically proposed many unexpected protective measures, mainly involving automatic trigger mechanisms. Cover the scope of the goods and the principle of origin. “A lot of these issues have been finalized earlier, and they have been approved by all member states, including India, but they have been re-introduced.”

Just before India announced its withdrawal on November 4th, Thai Commerce Minister Zhu Lin told the media that India had not been excluded, and the RCEP consultations were all “smooth.” That is to say, India’s withdrawal is the last choice, not long-term planning.

In a nutshell, the withdrawal of India is not a question of technical consultation between India and other countries.

Any trade agreement has its advantages and disadvantages. When India chooses to join the negotiations and has reached many consensuses with most countries, it is behind India’s willingness to overcome the shortcomings and believe that it can overcome the shortcomings, and believe that the benefits of joining RCEP far outweigh the disadvantages. Today, India chose to withdraw from RCEP, which essentially means that the disadvantages outweigh the benefits. However, this drawback mainly comes from the domestic. The Minister of Trade and Industry of the Philippines, Ramon Lopez, publicly stated on November 2 that “a country” is negotiating and confirming some issues in the country.

The signing of the RCEP was questioned and opposed by Indian opposition parties, civil society, trade experts and various industries. On November 4th, leaders of the Indian National Congress, the Indian Communist Party (Malaysia), the Grassroots Congress Party, the Daro Pei Progressive Alliance and other political parties gathered in New Delhi to discuss the impact of the economic downturn and RCEP negotiations on India and demanded the Modi government. Responsible for issues such as “economic slowdown, soaring unemployment rate, agricultural crisis”. Modi’s BJP is born out of the National Volunteer Group (RSS), and the RSS National Awakening Organization (SJM) has launched a national campaign to use domestic goods and even upgraded to boycott foreign goods. Both RSS and SJM are opposed to signing RCEP, and this force may have an impact on Modi’s ruling foundation.

The other 15 countries can’t just wait for India. Modi’s current exit decision is more of a last resort choice if he can’t solve domestic problems.

Is India withdrawing to dock the US and Europe?

For India to withdraw from RCEP, some media believe that this is not just a question of domestic political choice. Alexey Kupriyanov, a researcher in the Department of International Politics at the Institute of World Economics and International Relations of the Russian Academy of Sciences (IMEMO) and associate professor of history science, pointed out that in the US President Donald Trump refused to participate in the Trans-Pacific Partners. After the Relationship Agreement (TPP), India also decided not to rush to join the RCEP.

The Russian satellite news agency quoted the scholar as saying that India was not accepted to join the TPP and began negotiations on RCEP. But when Trump refused to participate in the TPP, it was clear that there was nothing to rush to join. Kuprianov said that without India, RCEP can still develop and function fully, but the difference is that if TPP does not participate in the United States, it loses its meaning.

The one that can prove this judgment is that one day after the announcement of the withdrawal of RCEP, India said on November 5 that it will explore an agreement with the United States. The Times of India stated that the move was considered a strategic shift and that India has refused to sign a free trade agreement with the United States for many years. Two days before the announcement of the RCEP, German Chancellor Angela Merkel said on November 2 that it was necessary to try to restart negotiations on a free trade agreement between India and the European Union. “We need to re-attempt to establish a free trade agreement between the EU and India.” Merkel said in New Delhi, “We have closed a talk.” She added that she had an in-depth discussion with Modi on the FTA. Indian Minister of Industry and Commerce Goyal said: “At present, India is exploring a trade agreement with the United States and the European Union. India’s industries and services will be competitive and will benefit from entering large developed markets.”

India’s withdrawal from RCEP is a factor of the United States and the European Union. This judgment itself is derived from a geopolitical perspective. The underlying line behind it is that India regards RCEP as a geopolitical tool. India is not willing to stand in China and wants to join the United States. The camp of the European Union.

This view is a neglect of the interests of India. As we all know, compared with TPP, RCEP is clearly a lower-level free trade zone. When the US Vice President Joe Biden visited India in 2013, he had sent an invitation to India to join the TPP negotiations, but India had a cold reaction. Later, although the United States once released a sporadic signal that India is expected to join the TPP, one of the most realistic problems is that India does not yet have the ability and willingness to join. Even if the issue of switching tax cuts is not discussed, India and the TPP provisions still have a huge gap that is difficult to overcome on several key issues such as intellectual property protection of drugs. It can even be said that the discussion of the so-called possibilities and potential benefits of India’s participation in the TPP is only a wishful wish on the academic level or on the policy level. In this regard, Indian officials have also expressed their views on many occasions.

Joining the TPP or docking with the developed economies of the United States, the European Union and other developed economies, India will suffer more economic losses than joining RCEP. Even though India and the United States and Europe have begun to negotiate a free trade agreement, this does not mean that India’s consideration of RCEP is due to the United States or the European Union. This is not in line with India’s real interests and does not meet the level of India’s domestic economy.

At a time when Sino-US contradictions have become the world’s most important contradiction, India’s relations with China have entered a new stage with the 2018 Modi visit to China and the Chinese President Xi Jinping’s informal meeting. India certainly knows that it is unrealistic to strategically target China or the US team. Neutrality is a realistic choice for major economies including India, the European Union, and Japan. From the United States, such as Japan, South Korea, Australia and other ally to join the RCEP, it can be seen that geopolitics is not the first choice for all parties to consider RCEP.

RCEP’s attraction to India has long existed

India’s leading non-governmental organization, the International Consumer Solidarity and Credit Association (CUTS), has made policy recommendations based on interviews with about 60 stakeholders in Mumbai, Chennai and Kolkata, hoping that India will play a role in RCEP negotiations. The role of the ruler (rele-setter), but at the same time emphasizes the phased reduction of tariffs, the discussion of rules of origin, the continued maintenance of agricultural export restrictions and quotas, and the avoidance of domestic legal and regional rules on intellectual property rights such as pharmaceuticals. A series of special treatments such as the integration. This position reflects the contradictory mentality of the Indian government and industry in market opening and rule reform.

India is not only worried about the impact of RCEP, but also is not willing to give up the opportunity to open up with the international community. Modi announced that he had withdrawn from the RCEP, avoided the political limelight and satisfied the interests of some Indians, but could not fundamentally quell the dispute. Excluding the interference of political factors, from the long-term interests of the Indian state, joining the RCEP is an established strategy.

In the early 1990s, India proposed the “East Look” policy and advocated strengthening cooperation with Southeast Asia and East Asia to avoid being marginalized. In November 2014, at the 12th India-ASEAN Summit held in Myanmar, Modi upgraded the “East View” policy to the “East Advance” policy, further demonstrating India’s strategic intention to integrate into the Asia-Pacific region. In November 2015, Modi reaffirmed the highest priority given to the India-ASEAN strategic partnership at the 13th India-ASEAN Summit in Kuala Lumpur.

The eastward advancement of India is not a temporary rise. A century-long history, the focus of the world economy has been on the banks of the North Atlantic for a long time, and Western European countries and North America have become important pillars of the global economy. In the eyes of strategists, “the 21st century is the Pacific Century.” According to data from the 2018 East Asia Cooperation Leaders Series meeting, the total economic volume of ASEAN plus China, Japan and Korea (10+3) reached 21.9 trillion US dollars in 2017, accounting for 27% of the world, surpassing the United States and the European Union, in the world economy. It is very important. The Modi government of India proposed eastward advancement. Japan and the United States and ASEAN emphasized the India-Pacific strategy. Russia frequently pushed to the east and its intentions were actively laying out the center of the future world economy. RCEP participating countries are almost always the most important economies in the future in Asia and the Pacific. In the long run, joining the RCEP is of great significance to India’s implementation of the “Dongjin” policy.

Especially after the second term, Modi, with strong political authority and high support rate, has an extraordinary expectation for India’s international status. In 2017, India’s GDP exceeded 2.597 trillion US dollars, surpassing France’s 2.582 trillion US dollars, becoming the world’s sixth largest economy. Indians are full of confidence, and their slogan is to surpass China in 2030 to become the world’s second, and to become the world’s number one in 2035. For the first time in the Foreign Trade Policy 2015-2020 developed by the Indian government, trade was set as an important part of achieving long-term strategic and security goals. As a long-term politician, Modi will never be willing to be dragged down by the temporary domestic political process.


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