India which had earlier withdrawn from Regional Comprehensive Economic Partnership (RCEP) trade talks is now mulling to rejoin the negotiations after it received a fresh proposal from the RCEP members, according to reports.
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RCEP is a mega free trade agreement among 10 ASEAN members apart from India, China, Japan, Australia, South Korea and New Zealand and if inked would be become the biggest trade pact after the World Trade Organisation (WTO).
The fresh letter sent by RCEP members following a meeting of the RCEP Trade Negotiations Committee on April 20-24 may indicate accommodation of some of India’s key conditions and finalization of the free trade talks by 2020-end.
An official privy to the matter confirmed that India’s Commerce Ministry and the Ministry of External Affairs were deliberating on the path of action after the country received a formal letter from the RCEP asking it to rejoin the negotiations.
The RCEP could become one of the biggest free-trade blocks in the world if India joins, accounting for 39 per cent of global GDP, 30 per cent of global trade and 45 per cent of the total population.
Pros and cons of RCEP.
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India has a trade deficit with 11 out of the 15 RCEP countries and economic experts believe that New Delhi pulled out of the agreement because RCEP might have further widened India’s adverse trade balance.
As per the latest data provided by DGCIS, India has a trade deficit of USD 53.57 billion with China, which is half of the total USD 105 billion trade deficit with the rest of the RCEP countries.
The trade deficit was widened after China joined the World Trade Organization (WTO) in 2001 and Indian Government believes a new wave of liberalization under RCEP would further reduce tariff lines across a higher number of products, which in turn would worsen this large trade deficit.
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Also, after India signed a Comprehensive Economic Partnership Agreement (CEPA) with Japan in 2011, which called for lowering of tariffs on almost all of the goods traded between the two countries, the imports from Japan increased at a faster pace than exports from India.
A similar trade deal with South Korea in 2010, which called for a reduction on taxes on the goods traded between the two countries, resulted in widening India’s trade deficit. India, which was the sixteenth member of the RCEP, quit talks in November 2019, following a failure to reach consensus on the degree of market access to be granted by New Delhi and on the elimination of duties on the total number of traded products.
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The present form of the RCEP Agreement does not fully reflect the basic spirit and the agreed guiding principles of RCEP,” Prime Minister Narendra Modi had then stated in his address at the RCEP summit in Bangkok, according to a tweet by official broadcaster Prasar Bharati.
“It also does not address satisfactorily India’s outstanding issues and concerns. In such a situation, it is not possible for India to join the RCEP Agreement.” “When I measure the RCEP Agreement with respect to the interests of all Indians, I do not get a positive answer,” Modi had said. “Therefore, neither the talisman of Gandhiji nor my own conscience permits me to join RCEP.”