India decides against joining Asia-Pacific free trade area
Country opts out of major trading bloc with 15 neighbouring nations over market concerns
India has decided against joining what would have been a 16-strong economic pact of nations trading in the Asia-Pacific region.
The Regional Comprehensive Economic Partnership (RCEP) was agreed at last weekend’s Association of Southeast Asian Nations (Asean) Summit, and is expected to come into effect in February.
Australia, New Zealand, Japan, South Korea and China – together with the Asean nations (Brunei, Cambodia, Indonesia, Lao, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam) – have signed up to the new multi-lateral free trade bloc, which has been in development since 2013.
The Indian government is believed to be concerned about opening up its markets, and the impact imports of cheap goods from China would have on its small businesses. It also raised concerns that free agricultural trade would impact its many small farmers.
“India had significant issues of core interest that remained unresolved,” said Vijay Thakur Singh, from the Indian Ministry of External Affairs. “In the given circumstances, we believe that not joining the agreement is the right decision for India. We would continue to persevere and strengthen our trade, investment and people-to-people relations with this region.”
India’s decision not to take part is seen as a major set-back. It is a big economy and with India in the group, the RCEP would have become the world’s largest free trade agreement area with 30 per cent of global GDP and half the world’s population.
China is a keen participant as it sees the pact as a way to lessen any impact from trade conflict with the US. The smaller nations are keen for India to join to counter the might of China within the group.
Australia will benefit by having easier access to export telecommunications, professional and financial services.
The RCEP will also facilitate more online trade and establish a common set of rules surrounding intellectual property.