Home https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ World https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ India says it does not join the RCEP pact involving major Asian economies

India says it does not join the RCEP pact involving major Asian economies

Indian Prime Minister Narendra Modi shakes hands with Chinese Prime Minister Li Kekiang at the Third Regional Comprehensive Economic Partnership (RCEP) Summit in Bangkok on November 4, 2019.

Manan Vatsayana | AFP | Getty Images

India on Monday refused to accede to the Asia-Pacific Trade Pact, which will form a major trading bloc comprising the highest economies in the region and covering nearly one-third of the world's gross domestic product.

The Regional Comprehensive Economic Partnership was an agreement between the 1

0-member Association of Southeast Asian Nations and six of its major trading partners: China, Japan, South Korea, India, Australia and New Zealand. Negotiations for a trade pact began in 2013 and India's reluctance to open its markets has been one of the major obstacles in time.

Vijay Thakur Singh, a diplomat in charge of East Asia-India relations at the Foreign Ministry, said on Monday that India had handed over its decision not to accede to the RCEP agreement with other Member States. Member States' leaders have been to Thailand at a number of summits, including the 35th ASEAN Summit.

"This reflects both our assessment of the current global situation and the fairness and balance of the agreement," Singh told reporters in Bangkok during a press briefing. "India had important issues of major interest that remained unresolved."

"In the circumstances, we believe that non-accession is the right decision for India. We will continue to persevere and strengthen our trade, investment and people – relations between people in this region, "Singh said.

With trade friction still dominating the global narrative, Asia needs to look inward and strengthen regional integration to sustain

Priyanka Kishor

The Oxford Economy [19659011] She declined to expand what some of these major unresolved interests were at the briefing, but added that the parties involved knew them. India would consider joining

"Despite significant concessions and proposals for safeguard measures from China, India remains concerned about the potential surge in Chinese imports and what it claims is a lack of progress on its offensive interests, in particular, access to the services market, "political consultants Eurasia Group wrote in a note on Monday.

India is already facing a challenging economic environment: growth is slowing, many of its sectors, including manufacturing, are struggling and there are difficulties in creating enough jobs to retain new entrants to the workforce.

What this means

The trade pact should be signed next year, according to Thailand. The text of the RCEP Agreement is considered to be complete and awaits legal review before Member States sign the document.

Analysts have said they are worried about the ongoing trade war between the US and China, rising US protectionism and the global economic slowdown pushing for negotiations.

"As trade friction still dominates the global narrative, Asia needs to look inward and strengthen regional integration to sustain and accelerate growth", Priyanka Kishore, Head of India and Southeast Asia Macro and Investment Services at Oxford Economics , he told CNBC before India announced its decision on Monday.

She explained that reaffirming the free movement of goods, services and capital in the region would help maintain ASEAN's central position in global trade. This would lead to new economic opportunities, support job creation in the country and help countries sustain strong long-term growth. Kishore, as well as other experts, earlier said that part of RCEP would help India better integrate into the global supply chains.

Eurasia Group analysts add that, with RCEP, market access, especially for services and regulatory requirements, would be easier than under the Comprehensive and Progressive Trans-Pacific Partnership Agreement – the trade pact that replaced the Trans-Pacific Partnership, after the US withdraws from this agreement.

"This limits the economic benefits of the transaction, especially in the short term; India's absence from the pact would also weaken profits, "analysts said, adding that there would be" significant medium-term impact "as market access barriers gradually decrease.

India's relations with the region

Narendra Modi held a number of bilateral meetings in Thailand with countries including Japan, Vietnam and Australia, and also welcomed the decision to review the ASEAN-India trade agreement.

"India will now seek to mitigate the damage caused by Its dealings with ASEAN, Japan and others – as well as the negative message it sends to international business and investors about prospects for reform in India – with its decision not to move forward with RCEP at this time, but perhaps not at all, "commented analysts. Eurasia Group.

They added that the Indian government would "try to make positive trade noises by talking to the US and the EU and accelerate efforts to build up a free trade agreement with ASEAN."

Australian Prime Minister Scott Morrison told on Monday that "the door to India will always be open and this has always been our opinion, and to many who sit around the table that this is a bigger and better deal with India in it."

Kishor said India would likely retain the option of joining It is to RCEP agreement at a later date if other Member States went ahead and signed the deal without the participation of New Delhi.

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