RCEP 2020 : World’s Biggest Trade Deal | UPSC
Mega trade bloc RCEP takes off
WHY IN NEWS:
India will have to re-apply for membership
SYLLABUS COVERED: GS 2 : 3 : Geo-Politics of Asia-Pacific Region : Trade
For PRELIMS understand the clauses of the deal , how the deal comes into action and benefits . Also keep an eye on the counterparts like TPP etc.
For MAINS go through significance , benefits of the treaty . We will surely cover this again in our Editorial Hunts . Let us dive in !
THE LANDMARK PACT
- The RCEP signatory states will commence negotiations with India at any time after the signing of the RCEP Agreement.
- In a statement after the initialising ceremony among member-countries on the sidelines of the 37th ASEAN Summit held virtually.
SIGNIFICANCE OF RCEP
- The China-backed group is expected to represent at least 30% of the global GDP and will emerge as the largest free trade agreement in the world.
- New Delhi has highlighted the necessity for peace and stability in the region but maintained silence regarding RCEP.
- It is indicating India’s difficulty in welcoming the China-backed grouping.
- India’s ties with China in recent months have been disturbed by the military tension in eastern Ladakh along the LAC.
- In the meantime, India has also held maritime exercise with Japan, Australia and the United States for the “Quad”, interpreted as an anti-China move.
- However, these moves did not influence Japanese and Australian plans regarding RCEP.
- Experts are interpreting the beginning of RCEP as a major development that will help China and trade in Asia-Pacific region in the post-COVID-19 scenario.
‘LEVERAGE FOR CHINA’
- The agreement means a lot for China as it will give it access to Japanese and South Korean markets in a big way, as the three countries haven’t yet agreed on their FTA.
- While the door remains open for India to join since there was “a degree of cynicism” among trade representatives on how the negotiations would turned out.
- Earlier New Delhi pulled out over concerns about how RCEP would affect the livelihoods of Indians, particularly the most vulnerable.
BENEFITS OF RCEP
- Supporters of the trade pact, which covers 2.2 billion people with a combined GDP of $26.2 trillion.
- It will bolster pandemic-weakened economies by reducing tariffs, strengthening supply chains .
- It will also have common rules of origin, and codifying new e-commerce rules.
- There are stronger provisions to address non-tariff measures, and enhancements in areas such as online consumer and
- This will introduce personal information protection through transparency and paperless trading.
- Negotiators pushed the deal across the finish line after India surprised participants late last year by abandoning the agreement.
- India, though, will be allowed to rejoin the trade pact.
- Whether RCEP changes regional dynamics in favor of China depends on the U.S. response.
- The Trans-Pacific Partnership or TPP — diminished America’s ability to offer a counterbalance to China’s growing regional economic influence.
- That challenge will shift to President-elect Joe Biden if, as expected, he’s officially named the winner of the Nov. 3 election.
- The RCEP signing comes as Southeast Asian nations experience uneven recoveries from the coronavirus pandemic.
- Governments across the region have been negotiating travel lanes and bubbles in fits and starts as officials weigh health risks with economic needs.
WHAT IS RCEP?
- The Regional Comprehensive Economic Partnership (RCEP) is a free trade agreement (FTA) that will create the world’s largest trading bloc.
- The 15 Asia-Pacific nations poised to sign RCEP in 2020 account for nearly a third of the world’s gross domestic product.
- China is the key member of RCEP, which will give it the upper hand in influencing the rules of trade in Asia-Pacific.
- The TPP became the much less influential CPTPP after President Donald Trump withdrew from the agreement in 2017.
Initially, it will include the 10 member countries of the Association of Southeast Asian Nations (ASEAN) and five Asia-Pacific countries with whom Asean has existing FTAs:
- New Zealand
- South Korea
- RCEP will lower or eliminate tariffs on a broad range of goods and services .
- It establishes rules on such things as investment, competition, and intellectual property, including digital copyright.
- Unlike the CPTPP, RCEP does not include provisions on labor and environmental standards.
- Malaysia, Indonesia, and the Philippines are among those still dealing with elevated virus caseloads.
- Singapore and Vietnam have so far successfully prevented new outbreaks.
- Through the tariff removals there’ll be a major impact on improving Japan’s exports and making the region’s supply chains more efficient.
SOURCES : BUSINESS STANDARD
- Free and fair economic rules through introducing new rules on data free flows and the banning of demands for technology transfers can create more competitive market.
- The protection of intellectual property and create an integrated market for China and regional nations will boost the trade in Asia-Pacific region.
India will also have to consider if the new U.S. administration revives the Trans-Pacific Partnership trade deal in some form and brings in all of its partners in the region.
SOURCES: THE HINDU | RCEP 2020 : World’s Biggest Trade Deal | UPSC