Will RCEP ever see light of day?

Awesome! Bir.. are we gonna talk about the same RCEP which was in the news last month?? I think I heard some news when our PM Modi said ‘Bye Bye Mitron’ to a group of countries in a summit...

Yep… you got it right bud! 

Okay!!!.. lets start.. 

Bir.. first thing first… can you explain what exactly is RCEP? 

Sure.. So RCEP stands for Regional Comprehensive Economic Partnership. It is a free trade agreement in the Asia Pacific region between few countries.

Oh okay and which all countries will be involved in it?

Initially RCEP was proposed to be signed between 16 countries i.e. 10 ASEAN countries + 6 others 

Bir.. you know my GK.. can you tell me which all coutries are part of ASEAN? 

ASEAN - Association of Southeast Asian Nations 

[Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Laos, Myanmar, Cambodia and Vietnam]

And which are the other 6 countries?

Australia, China, Japan, New Zealand, South Korea and India

Wait.. What?!?!?! You mean India and China will have a free trade agreement?! We already see Chinese goods being dumped in Indian markets, leading to disruption of local market.. How could they do this? :( 

Yes, your concerns are absolutely genuine.. While the intention was to make a big trade block which would enable free movement of goods between member countries but with China being one of the members, the free trade agreement may actually prove to be a disaster instead of any good for India. 

Just to give you some more perspective, of the 15 RCEP countries, India has trade deficits with 11 countries and it has almost doubled in last 5 years from $50bn in FY14 to $105bn in FY19 (wow!!) and a free trade agreement may only further worsen the situation. 

In light of the above concerns, India wanted some sort of safeguard / protection such that the free trade agreement does not lead to flooding of goods by a particular country. Further, India wanted that just like goods, free trade of services should also be allowed example Information technology etc.

India had voiced its concerns at various RCEP forums time and again.. But sadly, they were never addressed (oh no!!)

That is why to protect our domestic manufacturing companies and farmers, India decided to quit in the 3rd RCEP summit held in early November (oh yes!!) 

Oh.. Thank God! But but but.. Why are we discussing RCEP again??

Good question.. There has been a major recent development wherein Japan has said that it won’t sign RCEP if India doesn’t join (oooooo!)

Oh wow! Japan is sooo nice.. It has decided to move out along with India?? 

You’re sooo naive.. Japan has its own reasons for doing this.. 

Amongst all the countries in RCEP, India is the main focus for Japan. Japan exports heavy machinery, transport equipment, tools etc to India and all these are employment generators for Japan. With RCEP, Japan was hoping to get unlimited access to vast Indian markets. And with India out of the picture, Japan may not have anything lucrative in RCEP. 

Apart from this, the growing tensions between Japan and South Korea is also a reason behind Japan’s move.

Bir.. I think I have had enough for one day.. Let’s cover the tensions between Japan and South Korea some other day please..

Aye Aye Captain!

So.. it will be really interesting to see whether this move by Japan would lead to a change in RCEP agreement and whether India’s concerns will be taken care of or not and who knows India may join RCEP again.. Only time will tell!

Till then.. Hasta la vista!