A confident India need not stay out of RCEP anymore

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A confident India need not stay out of RCEP anymore

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• India walks out: India decided in 2019 to stay out of the RCEP, for which it had negotiated over several years. The other 15 countries have finally signed it, 10 being the ASEAN nations.
• India and ASEAN: India's recently committed deepening of trade ties with ASEAN, with which it signed the free trade agreement (FTA) in 2010. Today, ASEAN is India's fourth largest trade partner. India wants to speed up connectivity via physical, economic digital and financial means. India's 'Look East' was upgraded to 'Act East'.
• Why be afraid of the RCEP: India already had FTAs with Korea, Japan and is building one with Australia. Why fear RCEP then? It has just streamlined the exiting tangle of FTAs, making them mutually consistent. RCEP doesn't have more liberal provisions than existing treaties. In fact, India would have benefitted as its multiple treaties with countries (3 with Thailand) would be streamlined.
• Economic centre of gravity: RCEP becomes important as the world's economic centre of gravity has shifted east. India would have benefited a lot, as with it, RCEP would represent half the world's population and 35% world GDP. But after years of negotiations, India walked out. RCEP still wants India to join, but may not wait forever. Japan is a good example, as it joined despite hinting it won't, without India.
• India's worries: 

1. India was scared that Chinese goods would get free access, but stricter rules of origin and border enforcement could have checked that. Chinese imports actually have most value added in ASEAN, and finishing in India. Hence China runs trade deficits with ASEAN. So India could have handled this.
2. The worry of milk imports from NZ/ Australia flooding India was alarmist. The RCEP does cover 90% of products, but its zero-tariff regime is backloaded, and comes into play after 20 years. Additionally, some agricultural safeguards are given.

• How RCEP helps India: It can help streamline value chains that are spread across multiple countries. India's auto components need two-way flow of goods, as does the Apple's proposed production base in India. India's bulk drug exports too need backward linkages with APIs from RCEP nations. 
• The Biden Presidency: President Biden is likely to take US back into the CPTPP, which excludes China and has 12 nations, of which 7 are in RCEP. So India will the only major country out of all major regional trade blocs. Further, two members of the Quad - Japan and Australia - are in the RCEP as also in the CPTPP. Whom will they be loyal to now?
• China's domestic model: From here on, China officially claims it'd focus on domestic consumption, as part of "dual circulation model". It is "rebalancing" itself. The RCEP nations will get easier access to this $6 trillion worth of Chinese domestic market. Till 2030, China will import $22 tr worth of goods and services. India can benefit from all of this.
• High GDP growth: India cannot have higher GDP growth without higher trade growth. When imports and exports rise, then the nation gets more of embedded technology, know-how and management practices also.
• Atmanirbhar Bharat: It is not about autarky or import substitution. It is about being competitive and being able to afford required imports (to enable exports). India must sign the RCEP, to enable value chains coming into India in a big way. 

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