Indian trade chief pushes for deal with European Union, after Delhi rejects RCEP

Andrew Cummings
November 6, 2019

Congress president Sonia Gandhi had earlier said the RCEP agreement would represent a "body blow to the Indian economy".

Union Minister of Commerce and Industry on Tuesday said that India is exploring trade agreements with USA & E U while FTAs with Japan, Korea & ASEAN are being reviewed, adding that India is assured that India will never finalize any trade agreement in a hurry.

Gujarat-based Dairy major Amul on Monday thanked Prime Minister Narendra Modi for safeguarding the families of 10 crore milk producers by pulling out of Regional Comprehensive Economic Partnership (RCEP) free trade agreement.

Meanwhile, Seoul's trade minister Yoo Myung-hee hailed the agreement, . explaining the deal will bring new opportunities to South Korea.

At a time when trade protectionism is on the rise with countries increasingly looking inwards, led by the Donald Trump administration in the United States with its fondness for imposing punishing tariffs, especially on China, the RCEP appears to be China's bid to protecting its interests. There were also worries the country would be flooded by cheap goods from China. One Indian official, who asked not to be named, criticized these deals for dramatically increasing India's trade deficit and hurting domestic industry, and said the government couldn't go ahead with RCEP before renegotiating parts of these deals. As the dust settled following Modi's announcement, diplomats from several Asean states said they understood the reasons behind India's decision.

"Whenever India is ready, it is welcome to get on board", he said before Delhi confirmed its pullout.

"The decision by Prime Minister Modi to pull India out of the RCEP negotiations reflects considerable concerns domestically about the potential impact of RCEP on Indian industry", said Rajiv Biswas, Asia-Pacific chief economist for IHS Markit.

Views on how India has worked on protecting its interests have differed. It would also affect India's standing against China as a competitor. "What we don't have now is a lot of Asian trade for final markets in Asia".

Congress leader Randeep Singh Surjewala tweeted, "Modi Govt. backing down from signing RCEP is a victory of "National Interests".

India has lagged many countries in the region in opening its markets, and groups associated with the ruling nationalist Bharatiya Janata Party have staged scores of protests against participating in the RCEP.

Participating countries met in Bangkok alongside a meeting of South-east Asian leaders.

"As RCEP economies develop and their middle classes grow, this deal will open up new doors for Australian businesses and investors across our region". "Then I think every government is always open to discussions and negotiations", he said.

Nevertheless, informal talks on the sidelines of the ASEAN and East Asia summits made it clear that the remaining gaps were too wide to bridge.

The RCEP comprises of the ten South East Asian countries - Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam - plus China, Japan, South Korea, Australia, New Zealand, and India.

India's future inclusion in the deal is "always possible" but depends on whether the country "can live with what has been agreed on by the other 15 states or if the issue is exclusively with China", the envoy said. They have been tasked to do the legal scrubbing so that the deal can be signed in 2020.

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