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India’s Withdrawal from the Regional Comprehensive Economic Partnership
India withdrew from the largest ever free trade agreement, the Regional Comprehensive Economic Partnership after a multitude of stakeholders, including farmers’ organisations, trade unions, and industry associations, spoke in one voice on the adverse implications of the agreement. India has three FTAs with the members of Association of Southeast Asian Nations, Korea and Japan, which were expected to increase India’s exports. Exports did not increase as Indian enterprises lack competitiveness, but imports from the partner countries expanded, leading to the haemorrhaging of domestic manufacturing. Future participation in FTAs must be conditioned on improving the competitiveness of domestic entities.
On 4 November, India took the exceptional step of withdrawing from the Regional Comprehensive Economic Partnership (RCEP), a mega-regional trade agreement, which would have brought together almost one half of the global population, besides accounting for nearly 28% of the world trade. The government’s decision was influenced by a chorus of voices from a multitude of stakeholders who gave a clear message that ceding the country’s economic space to foreign businesses by accepting trade liberalisation commitments under the RCEP would deal a body blow to the interests of domestic players.
The RCEP was designed as a broad-based economic partnership agreement that went beyond the contours of traditional free trade agreements (FTAs). This implies that besides the conventional market access issues in goods and services, RCEP includes rules for the protection of foreign investment and intellectual property rights (IPRs), competition policy and electronic commerce (e-commerce), among others. Except IPRs, the other issues are not covered by the World Trade Organization (WTO).1 Thus, the RCEP is the most expansive regional trade agreement that India has ever negotiated.
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