India’s RCEP folly

Opting out of the China led trade pact may yield electoral dividends for now, but extract a bigger economic price in the long run

Opinion
By Editor_1
The leaders and trade ministers of the 15 countries in the Regional Comprehensive Economic Partnership posing during the signature - Vietnam News Agency, via Associated Press/NYT
0

By P.K. Balachandran

COLOMBO – India has opted out of the Regional Comprehensive Economic Partnership (RCEP) agreement signed last Sunday (15), saying that while the pact may open up economic opportunities, it does not give sufficient protection and/or encouragement to its industrial, agricultural and service sectors.

This follows the rejection of multiple requests, demands and suggestions, including country-specific tariff schedules, an auto-trigger mechanism to check a sudden surge in imports from particular member countries (principally China), stricter rules of origin and the movement of professionals.

However, the RCEP group comprising China, Japan, South Korea, Australia, New Zealand and the 10-state ASEAN grouping, has said its doors will remain open to India. The group is keen on using India’s capacities and accessing its giant market.

While protectionism does have a wide measure of popular support in India, especially now since China is a visible bogeyman, it could actually do India more harm than good. It will promote inefficiency and smother the innovative spirit in a world which is innovating and globalizing rapidly both in thought and deed. Over time, the shoe will start pinching in India and there will be a popular clamour for liberalization. But that would catch Indian entrepreneurs, long used to serving a captive market, on the wrong foot. Industry will again appeal for the continuation of protectionism.

India hopes to capture alternative markets in European and Africa not part of RCEP. It is reported India may also look to a new version of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) free trade pact if the US decides to join the agreement, which President Donald Trump had earlier abandoned. The CPTPP is a free-trade agreement (FTA) between 11 countries around the Pacific Rim: Canada, Mexico, Peru, Chile, New Zealand, Australia, Brunei, Singapore, Malaysia, Vietnam and Japan. But here too, the demand will be for quality goods and not the shoddy ones made for a captive Indian market.

Commenting on India’s decision to opt out of RCEP, The Hindu says: “With global trade and the economy foundering on the shoals of the COVID-19 pandemic, especially as new infections in Europe and the US prompt fresh restrictions there, the pre-eminence of the east Asian and Pacific countries including China, South Korea, Vietnam, Australia and New Zealand serving as a bulwark in containing the pandemic and re-energizing economic activity can hardly be understated. Add to this the heightened tariff uncertainty generated by the deadlocked Brexit negotiations between Britain and the EU, and it becomes evident that India may have missed a vital opportunity (by opting out of RCEP).”

It points out that several concerns voiced by India have been addressed and advices New Delhi to approach the pact with an open mind.

“The summary of the final agreement shows that the pact does cover and attempts to address issues that India had flagged including rules of origin, trade in services, movement of persons and, crucially, remedies and safeguards. It would be in India’s interest to dispassionately review its position and embrace openness rather than protectionism,” it adds, noting that among the ASEAN signatories are several small countries, including Vietnam and the Philippines, which not only have disputes with China but also have significant trade imbalances with it. Japan, South Korea and Australia are at odds with China on multiple fronts.

India wants to be a part of the global supply chain but, strangely, it is refusing to be part of a supply chain grouping at its very doorstep. Blind faith in the West, blind opposition to China or any China-led organization and the prospect of winning votes in domestic elections have led Indian leaders to take the decision to pull out.  However, this mind-set is not peculiar to the ruling Bharatiya Janata Party (BJP). It is evident across the political board.

Be that as it may, the recipe for India’s survival is in enabling its industry to grow up to face global competition and to get the best out of bilateral or multilateral agreements. India’s industry accounts for a mere 15% of its GDP now. It has to touch at least 25%.  Its agriculture has to be more productive and competitive to face any competition in the future. Furthermore, India has to be part of global supply chains and for this, tariff barriers have to be reduced.

And the best way to balance the effect of rising imports is by promoting exports and not by raising tariff walls. At any rate, tariff walls cannot be a permanent solution.

India’s plan for now and the future hinges on the success of its ‘Make in India’ project launched by the BJP government in 2014. But has it succeeded? According to UNTAD, India got US$ 49 billion FDI in 2019. But that figure includes inflows into the capital markets, which accounts for the lion’s share of capital flows into the country. FDI in manufacturing was around US$ 8 billion in 2018-19, accounting for less than a quarter of the total inflows. E-commerce, which has nothing to do with either manufacturing or ‘Make in India’, is one of the key sectors for FDI. Making manufacturing sector be 25% of GDP (and not 15% as now) to create a 100 million additional jobs in the manufacturing sector by 2022 is certainly not achievable looking at the current situation.

‘Make in India’ is not working because suitable conditions for setting up industries are not there, though India has gone up in the ladder in terms of ease of doing business. Land acquisition is a major hitch. The second difficulty is in acquiring technology. The third difficulty is in acquiring talent. Indians should enter industry. Presently they study engineering but look for business management or administrative jobs. The visa rules of global recruitment are too stringent, which makes global recruitment impossible. The fourth difficulty is in securing raw materials and intermediate goods. For getting these goods at reasonable prices, import restrictions will have to be eased. Protectionism doesn’t fit here.

Protectionism as a general rule may actually prevent domestic industry from growing. India has to shed its fear of the world and reasonable competition if it is serious about becoming an engine of growth in the region and a power, however modest the latter ambition may be.

 -P K. Balachandran is a senior Colombo-based journalist who in the past two decades, has reported for The Hindustan Times, The New Indian Express and the Economist

 

Editor_1
You might also like More from author

Leave A Reply

Your email address will not be published.

otc high blood pressure treatment blood pressure guidelines medications blood pressure pills that is safe for the liver high blood pressure medication levothyroxine blood pressure medication that reduces blood pressure is there any difference in blood pressure pills high blood pressure child medication blood pressure medication recommendation nose blue blood pressure medication blood pressure is 150 68 should i take my medication blood pressure medication while nursing taking a bunch of high blood pressure pills aerobic exercise and blood pressure medication good blood pressure medication acupuncture treatment for low blood pressure best over the counter pills for high blood pressure blood pressure pill amlodipine besylate high blood pressure signs and treatment moderna vaccine blood pressure medication which blood pressure drugs do not cause tinnitus blood pressure medication fights cancer blood pressure medication skin rash side effects of high blood pressure medication impotence medication to avoid on blood pressure medications high blood pressure rx medication peripheral neuropathy caused by blood pressure medication high blood pressure in pregnancy treatment nice runny nose do to blood pressure medication how to get off of blood pressure pills hiv medication and high blood pressure niacin treatment for high blood pressure two drugs for blood pressure that caused cancer high blood pressure causing medications high blood pressure medication names canada blood pressure medication side effects alcohol i take 3 blood pressure medication blood pressure pills that help with anxiety what iv drug raises blood pressure list of doctors who formulated blood pressure medications how to remember blood pressure medications sleeping pills blood pressure how fast does blood pressure medication take effect sweet n low high blood pressure medication home treatment for blood pressure high blood pressure medication matrocet high blood pressure medication doses blood pressure drug bystolic iberstaron blood pressure medication blood pressure medications st alphabetical celexa and high blood pressure medication does blood pressure pills irritation skin can i take combivent with high blood pressure medication blood pressure medications beta blockers list what to do if blood pressure medication does not work drugs to lower your blood pressure red beet pills for blood pressure taurine and blood pressure medications how ling for garlic pills to lower blood pressure blood pressure medication list and side effects can i take aspirin with high blood pressure medication blood pressure medication teaching about hot tubs water pills high blood pressure over counter what is an arb medication for blood pressure resveratrol high blood pressure medication high blood pressure medication and weight loss gum disease and blood pressure medication benzenesulfonic acid in blood pressure medication taking two blood pressure pills by mistake allergy pills for high blood pressure blood pressure prescription drugs safety blood pressure medication in pregnancy trazodone and blood pressure medication which blood pressure medication is linked to skin cancer list of blood pressure medications with the least side effects could blood pressure medication make blood thicker disadvantages of high blood pressure medication blood pressure medications ludipril typical drugs for high blood pressure otc water pills for high blood pressure blood pressure medications that do not doncause bowel blockage high blood pressure after corrosion treatment how soon does high blood pressure medication work blood pressure medication teaching amertyrine high blood pressure medication increased blood pressure and heart rate after drug overdose over the counter drugs high blood pressure blood pressure medication 25 is blood pressure medication a nitrate most effective blood pressure pills blood pressure medical does red yeast rice interfere with high blood pressure medication can apple cider vinegar pills lower blood pressure does blood pressure medication give you headaches high blood pressure medication and driving should you take blood pressure pills with food inn blood pressure drugs can you eat bananas if taking blood pressure medication popular high blood pressure medication blood pressure medication los blood pressure medication second drug low blood pressure and hypertension medication do water pills lower blood pressure high blood pressure pill aqunadine high blood pressure cholesterol medication how does medication lower blood pressure acetaminophen blood pressure medication blood pressure medication 30 mg that works around the heart what does grapefruit do to blood pressure medication can red yeast rice be taken with blood pressure medication pharmaceutical treatment for high blood pressure are blood pressure pills statins blood pressure pills that start with r blood pressure medication and male impotence taking baby aspirin with other high blood pressure medications what is the medical name for a blood pressure cuff leg cramps and blood pressure medication blood pressure pill name starts with p natural high blood pressure treatments blood pressure medication names losartan higher blood pressure with radiation treatment medical marijauna high blood pressure how to avoid medication for high blood pressure what time is best to take blood pressure medication medication for palpitations and high blood pressure latest news on blood pressure treatment what if i take two blood pressure pills does xanax interfere with blood pressure medication amlipan blood pressure medication vitamin e and blood pressure medication tell me the side effects of high blood pressure medication herbs pills to lower blood pressure blood pressure medication urge to urinate what medication will safely replace lisop as blood pressure medicine active ingredient in high blood pressure medication blood pressure medications cause adrenal tumors is biktarvy ok to take with high blood pressure medication alembic blood pressure medication sandoz blood pressure medication exercise high blood pressure medication grapefruit pills blood pressure treatment for high blood pressure at home blood pressure medication for patients with osa cycle on off blood pressure medication blood pressure drugs that do not cause heat sensitivity blood pressure medications that do not cause coughing what blood pressure medications do not cause rosacea pfizer blood pressure medication side effects do garlic pills really help lower blood pressure should i take medication for anxiety induced blood pressure treatment for uncontrolled blood pressure decongestant medication high blood pressure can stiff days be used with high blood pressure medication how long does it take medication to lower blood pressure what if i miss a blood pressure pill tribenzor high blood pressure pills law lawsuit 2023 treatment of sudden drop in blood pressure zoloft and blood pressure medication orange high blood pressure pill cancer blood pressure pill why cant people with high blood pressure take keto pills how long for blood pressure to go down mini pill should i get second opinion before taking blood pressure medication blood pressure erectile dysfunction medication high blood pressure medication m lot ben medical device lowers blood pressure puppy ate blood pressure pill are there medications for low blood pressure dod blood pressure medication is losartan a blood pressure pill combination drugs for blood pressure marijuana and blood pressure medication interaction blood pressure medication interactions with grapefruit can you eat bananas while taking high blood pressure medication steps before going on high blood pressure medication blood pressure medication when to cut down foods to avoid on blood pressure medication blood pressure medications depression blood pressure medication non beta blocker tattoos and high blood pressure medication what is the medications used to lower blood pressure quickly high blood pressure medication leg swelling blood pressure medication men in your 40s blood pressure medication wieight loss blood pressure medication hy can blood pressure medication lower blood sugar does blood pressure medication make you pee natural treatment high blood pressure during pregnancy can you take l arginine with high blood pressure medication what class of blood pressure medication can can blood pressure pills reduce appetite faa approved medication for high blood pressure high blood pressure medication during pregnancy best blood pressure medication for type 2 diabetes blood pressure and pain medication pain medication that does not affect blood pressure best high blood pressure drugs on the market if you take incorrect medications to lower blood pressure low blood pressure treatments does your body have to adjust to blood pressure medication why water pill for high blood pressure drugs for treatment of very high blood pressure during pregnancy can i drink grapefruit juice with high blood pressure medication can blood pressure pills make you feel cold high blood pressure medication that helps with weight loss amlodipine blood pressure drug blood pressure medication for infants varicose veins blood pressure medication life extension high blood pressure medication does tylenol interfere with blood pressure medication can i take diamox with other high blood pressure medications prestige medical blood pressure cuff calibration drugs used for high blood pressure chamomile tea and high blood pressure medication narcotics stored alongside blood pressure medications in does nutrigrove blood pressure pills work extremely low blood pressure treatment blood pressure medication for iga nephropathy blood pressure medication low side effects can i increase my blood pressure medication what is the best blood pressure medication to take drugs that cause increased blood pressure does biotin interfere with high blood pressure medication cani od on high blood pressure pills blood pressure medication that also helps with jerking blood pressure medication categories first line treatment of high blood pressure medication for low blood pressure in usa armour thyroid drug interactions blood pressure meds hepatitis c treatment high blood pressure high blood pressure arb drugs low blood pressure treatment with essential oils high blood pressure medication list for pregnancy blood pressure medication and snake venom blood pressure medication low dose liquid blood pressure medications ivf drugs and high blood pressure left my blood pressure medication does it matter when you take blood pressure medication can you take blood pressure pills twice a day privilin blood pressure medication how big are blood pressure pills once you start blood pressure medication can you stop diuretic in blood pressure medication what medication reduce blood pressure new blood pressure treatment prescribed home medications for high blood pressure blood pressure medication side effects forums taking blood pressure pills dizzy when bend over a lot blood pressure medication and nyquil cinnamon pills and high blood pressure temporary high blood pressure treatment single agent blood pressure medication blood pressure medication made in china fda approved medications to reduce blood pressure immediate treatment for high blood pressure at home best time to take blood pressure pills muscle loss on high blood pressure medication blood pressure medication when needed treat high blood pressure without medication blood pressure medication side effects for men cbd pills for high blood pressure blood pressure regulation without medication blood pressure medication and pre workout high blood pressure alzheimer disease and antihypertensive treatment miss blood pressure medication blood pressure pills suicide peaceful emergency drugs for low blood pressure common blood pressure medications in canada systolic blood pressure define medical viril and high blood pressure pills can statin drugs help lower blood pressure do you have to wean off blood pressure medication new drugs for blood pressure when is high blood pressure medication necessary drugs for hi blood pressure cold medications and blood pressure taking 2 blood pressure pills mistake why doctors stopped prescribing blood pressure medication common high blood pressure medication canada what side effects does blood pressure medication have ulcer medication high blood pressure can high blood pressure medication elevate alkaline phosphatase blood pressure medication warning getting blood pressure medication jamaica alkaline water and blood pressure medication blood pressure going up and down with medication drugs reduce systolic blood pressure treatment for rapid high blood pressure low blood pressure alternative treatment do all high blood pressure medications cause weight gain medication for increasing blood pressure blood pressure medication for african american males vitamins for high blood pressure treatment aleve with blood pressure medication how to lower blood pressure without pills blood pressure triple pill who blood pressure guidelines for hygiene treatment what drug reduces blood pressure blood pressure medications enalapril met blood pressure medication