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Nov 15, 2020, 06:26:19 PM | TOI.in
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RCEP: Why India opted out of world's biggest trade deal signed today

Fifteen Asia-Pacific countries — with a combined gross domestic product (GDP) of over $26 trillion and comprising nearly one-third of the world's population — signed the world's biggest trade deal at the 37th Association of Southeast Asian Nations (Asean) Summit on November 15. The Regional Comprehensive Economic Partnership (RCEP) aims to achieve a modern, comprehensive, high-quality and mutually beneficial economic partnership agreement among the Asean member states and its FTA (free trade agreement) partners. However, as negotiations to finalise the long-overdue agreement entered its final stages, in November 2019, Prime Minister Narendra Modi surprised fellow member nations by choosing to opt out of it. Following India's withdrawal, the remaining 15 nations signed the RCEP on Sunday on the sidelines of the annual summit of the 10-nation Association of Southeast Asian Nations, which Vietnam was hosting virtually. However, many participating nations are also becoming too economically dependent on China with the pact seen as a coup for it in extending its influence across the region. The RCEP negotiations were launched by leaders from 10 Asean member states (Brunei Darussalam, Cambodia, Indonesia, Loas, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and six Asean FTA partners (Australia, China, India, Japan, Korea and New Zealand) during the 21st Asean summit in Phnom Penh in Cambodia in November 2012. India pulled out of the China-backed trade agreement as negotiations failed to address its core concerns. These were threat of circumvention of rules of origin due to tariff differential, inclusion of fair agreement to address the issues of trade deficits and opening of services. India would have the third biggest economy in the RCEP. Analysts believe that India might lose investments while its consumers may end up paying more than they should, especially when global trade, investment and supply chains face unprecedented challenges due to the Covid-19 pandemic. India's relationship with Asean is a key pillar of its foreign policy and the foundation of the Act East Policy. Its focus on a strengthened and multi-faceted relationship with Asean is an outcome of the significant changes in the world’s political and economic scenario since the early 1990s and India’s own march towards economic liberalisation.

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