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    BlogNews & JudgementIndia & Regional Comprehensive Economic Partnership (RCEP)- Know Why India Left

    India & Regional Comprehensive Economic Partnership (RCEP)- Know Why India Left

    Regional Comprehensive Economic Partnership

    Regional Comprehensive Economic Partnership (RCEP) is a vast trade negotiation amid with 16 countries of Asia Pacific which aim to cover goods, services, investments, economic and technical cooperation, competition, and intellectual property rights between these nations. The 

    16 RCEP countries consist of China, India, Japan, South Korea, Australia, New Zealand, and the  10-member ASEAN countries; which represents more than 3.5 billion people and regarding 40 percent of global GDP. India has already implemented a free trade agreement with ASEAN, South Korea and Japan; and also negotiating alike pacts with Australia and New Zealand. The Regional Comprehensive Economic Partnership was established during the 19th ASEAN meeting held in November 2011. The RCEP negotiations were initiated during the 21st ASEAN Summit held in Cambodia in November 2012. 

    The countries participating in the RECP have also signed a number of joint FTAs with other member countries. The RECP is expected to improve the efficiency of regional production networks.

    RCEP negotiations will follow 8 Ideologies: 

    (1) uniformity with the WTO

    (2) major improvements over the accessible ASEAN+1 FTAs

    (3) facilitation of trade and investment

    (4) flexibility to the least developed AMS

     (5) maintenance of existing FTAs

    (6) open agreement clause

    (7) technical help and ability to build the developing and least-developed countries

     (8) parallel negotiation. 

    In November 2012 RCEP negotiations were introduced, and 18 rounds of negotiation have been held, as well as six ministerial meetings and three intermediate meetings. But there is limited development as members have disagreements in lowering commodity prices, freedom of services and investment structure.

    Why is RCEP significant?

    The 16 countries negotiating the RCEP jointly account for one-third of the gross domestic product (GDP) and about half the world’s population, with the shared GDP of China and India alone building up more than half of that. RCEP’s global economic allocation could report half the expected $ 0.5 quadrillion global (GDP, PPP) by 2050.

    What is the purpose of RCEP? 

    The RCEP governing principle states, “The purpose of the RCEP negotiations is to accomplish a modern, comprehensive, high-level agreement that benefits economic cooperation involving ASEAN member states and ASEAN’s FTA partners (free trade agreement).

    1- Trade in Goods

    2- Trade in Services

    3- Economic and Technical Cooperation

    4- Investment

    5- Intellectual Property

    6- Competition

    7- Dispute Settlement

    8- Other issues

    Why did India walk out?

    On November 4, 2019, India decided to withdraw from an argument on “significant outstanding disputes”. As per a government official, India had been “constantly” raising “fundamental issues”; and concerns related to the negotiations due to which it was encouraged to take this decision as it has not yet been resolved by a deadline to commit to signing the agreement. Its decision was to protect the interests of industries like agriculture and dairy and to provide an opportunity for the country’s services sector. As per the officials, the current scenario of RCEP still does not tackle these issues and concerns.

    Prime Minister Narendra Modi, in his speech during the RCEP conference; said that “the current status of the RCEP agreement does not completely imitate the basic character and agreed with the philosophy of RCEP”

    How far is China’s prevalence a factor?

    Increasing conflict with China is a major factor in India’s decision. While China’s participation in the agreement has already seemed difficult in India due to various economic coercion; the conflict in Galway Valley has created bad relations between the two countries. Major issues that were unsolved during RCEP negotiations were related to the revelation that India will have to go to China. This built-in India’s fears that there was “insufficient” protection against imported surges.

    India has failed to ensure counter-measures such as the auto-trigger mechanism to raise prices on products when their imports exceed a certain limit. India has seen that the agreement will force it to increase the benefits offered to other countries in sensitive areas such as protection for all RCEP members. The RCEP also lacked clear assurance about market access problems in countries such as China and free tariffs on Indian companies.

    What can the resolution cost India?

    There is concern that India’s decision will affect its trade agreements with RCEP member states, as they may be more tending to focus on strengthening economic ties within the organization. The move is likely to leave India with little possibility to touch the vast market offered by RCEP. The size of the agreement is immense, as the countries involved make up more than two billion people in the world.

    Given attempts by countries like Japan to bring India back into the agreement, there is also distress that India’s decision; may influence the Australia-India-Japan bond in the Indo-Pacific. It is possible to put a spanner in the informal chat activities to promote the Supply Chain Resilience Initiative between the three

    Our Share

    However, India’s stand on this agreement also comes as a result of learning from illegal trade estimates with several RCEP members; some of whom have FTAs. An internal assessment conducted by the government revealed that the growth in trade (CAGR) with partners over the past five financial years was 7.1% lower. Even though “there has been a rise in both imports and exports to FTA partners”; the “utilization rate” of FTAs ​​in India and its partners has been “reasonable” across all sectors, according to the study; which includes pacts with Malaysia, Afghanistan, Thailand, Singapore, Japan, Nepal, Bhutan, Republic of Korea and Sri Lanka.


    India, as the first participant in the RCEP negotiations; has the opportunity to join the agreement without waiting for 18 months as set out for new members in terms of the agreement. The country that signed the RCEP said it planned to start negotiations with India once it had submitted a request for its intention to join the agreement “in writing”; and could participate in meetings as a spectator prior to its introduction.

    India currently has agreements with members such as the ASEAN bloc, South Korea and Japan and is negotiating agreements with members such as Australia and New Zealand. Two India-Singapore CECA reviews have been completed; the India-Bhutan trade and transport agreement was changed in 2016, and the India-Nepal Trade Agreement was postponed in 2016. Eight negotiations have been accomplished for the India-Korea CEPA review, which started in 2016. 

    What’s Next

    There is also a growing perception that it will help India’s interest in investing heavily in negotiating bilateral agreements with the US and the EU; both of which are currently in the process of being developed.


    This article is written by Trishla Dwivedi, she is a hardworking law student from Jamnalal Bajaj School Of Legal Studies. She contributed this article on Legal Thirst. You can reach her at 2ktrishla[at]gmail[dot]com

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