Mains Paper 2: International Relations
Prelims level: Regional Comprehensive Economic Partnership
Mains level: What India should have stayed to joining Regional Comprehensive
India has chosen to hold back from joining the Regional Comprehensive
Economic Partnership (RCEP) trade agreement, turning its back on one of the
most dynamic regions in the world.
Certain segments which lobbied against the deal might be relieved at the
outcome, but the loss to the economy far exceeds the short-term perceived
benefits of staying out of the pact.
While the political rhetoric continues to centre around free trade, the
government’s action signals a distinct shift towards a protectionist stance.
Much of the domestic opposition to joining the RCEP is rooted in the
fear that the influx of cheap Chinese products, non-tariff barriers which
tend to restrict market access, and cheaper dairy products from New Zealand
would worsen the already ballooning trade deficit and dent the domestic
There are reasonable arguments to be made that certain sectors,
agriculture in particular, would need safeguards.
Though the details of these negotiations are not yet known, the Indian
side should have made greater effort to convince other countries for
carve-outs for certain sectors, and for allowing a gradual phasing out of
tariffs to ease domestic fears.
New Delhi should have used this as an opportunity to push through
contentious but necessary reforms that would boost competitiveness.
But, by deciding not to join, it has succumbed to the protectionist
impulses that have guided much of its recent trade moves.
While it is possible that the deeper than expected slowdown in the
economy may have tilted the balance in favour of not joining, a certain
policy incoherence marks this government’s approach. On the one hand, it
wants India to become a manufacturing hub.
Yet, staying out of the RCEP reduces opportunities for trading with
these countries, which together account for roughly a third of global trade.
Manufacturing today requires greater integration with global supply
chains. Signing the agreement would have signalled an embrace of freer
trade, which could have aided in the shift of companies out of China to
India. But the move has complicated India’s course to integrate into global
value chains. With this, India has also ceded space to China to have greater
say in the region.
The failure to do so, bowing to the pressure of various interest groups,
shows that parliamentary strength alone is not sufficient to push through
contentious but necessary reform.
Q.1) Recently, India signed a financing agreement with World Bank for
project 'Tejaswini'. The project aims at (a) rehabilitation of trafficked women.
(b) indigenisation of defence technology.
(c) fostering a culture of innovation, Research & Development in India.
(d) socio-economic empowerment of adolescent girls and young Women.
Correct Answer: D
Q.1) How the government’s move on holding back to RCEP is significant for trade
sector in India? \