Upon leaving RCEP, has India left Asia?
NEW DELHI: While India's decision on Monday to stay out may have had some economic justification, India's geopolitical ambitions have been affected. At the moment, China seems to be the big winner here, and with its trade and supply chain networks that are linked to ASEAN, it is looking to become the dominant power without control of Asia.
Evan Feigenbaum de Carnegie Endowment for International Peace (CEIP) tweeted shortly after India's decision was made public: India seems to be leaving RCEP, which means we are likely to have two large blocks of trade and investment: PTP and RCEP, which establish rules and standards for the economic area in this region, but WITHOUT THE US. UU. nor India included. USA UU. and India with something new in common, not necessarily a good one: now firmly united in being outside both the TPP and the RCEP. -Asian norms/standards without the Indus and without the giant economy in the Pacific. Can you have the Indo-Pacific when you have none?
India's decision was a difficult and deliberate decision at the highest level in government during the last months. It is unlikely that India's decision to withdraw at 11 am will send a positive signal in the region. There have been concerns that India's Indo-Pacific policy would be adversely affected because it is no longer at the trade table. This perception could be gaining ground in some of these countries, which means that India's reach will have to be more substantive in the coming days.
India will now seek bilateral trade agreements with key countries in the Asian region. The first is likely to be a trade agreement with Australia, although it may not be New Zealand. The sources said that India identified Indonesia, Vietnam, Australia, Japan and Singapore as its key economic partners in this region. The Asean FTA of India will continue, although even that is being renegotiated, as are those of Thailand and even South Korea. But the main sources indicated that in Asia, India would prefer to seek bilateral agreements for some time, as did Trump in the United States.
The presence of India in RCEP was something desired by almost all of its ASEAN and Japan partners. Japanese Prime Minister Shinzo Abe personally intervened with Modi to convince him to join RCEP. Other ASEAN countries have repeatedly appealed to India to be part of the agreement, to balance China.
India has been negotiating RCEP for the past seven years, of which more than five years have been in the government led by Modi. The Indian government has had conflicts over the RCEP for years, which makes the negotiations a less than optimal exercise. Meanwhile, the global economy has changed color, the Indian economy is struggling, which affects the way Indian governments also see trade and investment.
But as the negotiations progressed, it became clear to Indian negotiators and their political leaders, many of whom spoke with the TOI, which was an unequal FTA between India and China, where China has refused to accept any of the big problems that India had. He was not helped by the fact that Indian officials negotiated very badly, making concessions that were indefensible, officials said.
The pitfalls included, according to official sources, inadequate protection against sudden increases in imports, an insufficient differential with China, a possible circumvention of the rules of origin and the maintenance of the base year as 2014, nor were there credible guarantees on access to market and non-tariff barriers. As recently as at the informal Mahabalipuram summit between Xi Jinping and Modi, Indian officials who reported to the media cited the Chinese president who agreed to address RCEP's concerns in India. That also got in the way.
We made a mistake, we should have left long before round 29, said an important government source. He said that India was, in many ways, the strange one: all ASEAN countries are part of the global supply chains, with more sophisticated systems than India. None of these countries have a problem with the results of China as India does, because at the end of the day, India is basically a big market. India could have taken steps to improve its systems, regulatory mechanisms and infrastructure behind its borders to become more trade friendly, but it did not.
However, high-level sources said signing the RCEP at this point would have kept India forever as a strategic subsidiary of China. We cannot show strategic clarity about China in the field of security, but rather become a minor player in economics and commerce, sources said. Today is the moment of growth of India.
The way in which India advances from here will determine its foreign policy in the most dynamic region of the world.