The Regional Comprehensive Economic Partnership (RCEP) is a proposed trade pact between the 10 countries of the Association of Southeast Asian Nations (ASEAN) and their six Free Trade Agreement (FTA) partners, including Australia, China, India, Japan, Korea, and New Zealand.

If finalised, it will account for 25% of the globe’s gross domestic product, 30% of global trade, 26% of foreign direct investment flows, and 45% of the world’s population.

Leaders of the concerned countries are scheduled to meet on the 4th of November this year at the Leaders Summit which is going to be held in Bangkok, Thailand. The conclusion of RCEP negotiations is expected to be announced then, vindicating doubts, fears, and apprehensions held by various stakeholders.

Talks on RCEP began all the way back in 2012, but the participating nations have not reached any conclusion yet. The uncertainty in global trade, with the ongoing US-China trade war, is slowing down talks further.

The 7th RCEP Ministerial Meeting in Bangkok this September had aimed at closing the deal which would have possibly formed the world’s largest free trade bloc but the final call over the matter will now be taken in November.

In a joint statement, the RCEP participating countries (RPCs) who met in Bangkok said, “Notwithstanding the remaining challenges in the negotiations, RPCs are working on addressing outstanding issues that are fundamental to conclude the agreement this year as mandated by the leaders.”

However taking into consideration the global economic slowdown and the uncertainties in trade and investment environments – which have been impacting businesses and jobs – the joint statement added, “While noting that certain developments in the global trade environment may affect RPC’s individual positions in the course of the negotiations, ministers have agreed that RPCs should not lose the long-term vision of deepening and expanding the value chains in the RCEP.”

India’s Conundrum

India has been looking at keeping its domestic industries in equilibrium with the foreign trade the RCEP deal will bring in.

Key industrial contributors to India’s domestic growth have been warning the Commerce Ministry that China could swamp India’s manufacturing sector by dumping cheaper goods.

In an RCEP convention in Beijing, India’s Commerce Secretary Dr. Anup Wadhawan with his delegation highlighted India’s concerns regarding market access and other issues leading to imbalanced trade between some of the partner countries.

With India’s trade deficit with China standing at USD 53.6 billion, liberalisation of tariffs with China that the RCEP deal pushes could be damaging to its indegenious industries. There is also serious speculation about India having to compulsorily side with China after the signing, amidst its trade war with the US, at a time when Indo-US relations are improving diplomatically.

Nevertheless, there are many who believe that being a RPC would be beneficial to India, also aiding it to achieve its $5-trillion-economy dream. It is viewed by the promoters of the deal as India’s chance at properly integrating its manufacturing sector with the global value chain, looking at opportunities for the production of telecommunication equipment, mobile phones and textiles.

Problems At Home

Automobile Sector

Credits: Pixabay

Society of Indian Automobile Manufacturers (SIAM) have expressed their concerns over RCEP affecting employment conditions and the Make In India initiative.

While maintaining that India’s 42 free trade agreements (including preferential agreements) mostly with Asian countries had not benefited the domestic automobile industry at all, SIAM President Rajan Wadhera told ET reporters, “Being a part of global trade, there are gives and takes. We are only saying that the government should be mindful of two things – job creation/loss and Make In India. RCEP and free trade agreements should not have any adverse effect.”

Bicycle Industry

Credits: Pixabay

The Indian bicycle has played an important role in the growth, development and expansion of the Micro, Small Medium and Enterprises (MSMEs). It is also the quintessential symbol of a regular working Indian as the ownership of this commodity is almost ubiquitous. Being the the second largest producer, only next to China, India manufactures around 1.5 crore bicycles every year.

But China’s presence in the free trade bloc is a big concern for domestic bicycle industry as per Ludhiana Handtool Association President, S C Ralhan.

China’s current bicycle imports have already hurt the industry at home. “India’s bicycle imports from China stood at about Rs 1,600 crore in 2018-19 and this is a big figure given the fact that the sector engages mainly small and micro units,” he said. Alleging that China is involved in indirect exports through Sri Lanka and Bangladesh as these neighbours have no import duty on the product, Ralhan believes that any cut in duties…