• Fifteen Asia-Pacific nations, including China, on November 15 signed the world’s biggest trade agreement, the Regional Comprehensive Economic Partnership (RCEP), sans India with hopes that it will help recover from the shocks of the COVID-19 pandemic.

• The RCEP was signed after eight years of negotiations at the conclusion of the annual summit of Southeast Asian leaders and their regional partners, held virtually this year due to the COVID-19 pandemic.

What is the RCEP?

• The RCEP bloc includes the 10 ASEAN members (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and China, Japan, South Korea, New Zealand and Australia.

• The RCEP negotiations were launched during the 21st ASEAN Summit in Phnom Penh in November 2012. 

• The 15 RCEP countries agreed on the terms of the deal last year, setting up the path for it to be signed during the summit. After the signing, all countries would have to ratify the RCEP within two years before it becomes effective.

• These 15 economies cover nearly a third of the global population and about 30 per cent of its global gross domestic product.

• The RCEP will progressively lower tariffs and aims to counter protectionism, boost investment and allow freer movement of goods within the region.

• Notably, RCEP marks the first time China, Japan and South Korea have been brought together under a single trade agreement — a process that has been otherwise marred by historical and diplomatic disputes.

• India, one of the leading consumer-driven markets in the region, pulled out of talks last year. But other nations have said in the past that the door remains open for India’s participation in the RCEP.

Why did India pull out of the RCEP?

• Minister of External Affairs minister S.Jaishankar said India withdrew from the RCEP as a number of key concerns flagged by it were not addressed. He said joining it would have resulted in fairly negative consequences for the country’s economy. 

• India was part of the RCEP negotiations for nearly seven years. The unresolved issues included inadequate protection against import surge, lack of credible assurances to India on market access, non-tariff barriers and possible circumvention of rules of origin by certain countries.

• The government was concerned that the elimination of tariffs would open its markets to a flood of imports that could harm local producers. Experts warned that India’s large dairy industry would be impacted due to the RCEP as Australian and New Zealand producers could flood Indian markets and kill off mainly unorganised and inefficient small-scale Indian producers.

• Another main reason for India’s reluctance to join the RCEP was China.

How is RCEP different from CPTPP?

• The idea of RCEP, hatched in 2012, was seen as a way for China, the region’s biggest importer and exporter, to counter growing US influence in the Asia-Pacific. It gained momentum when Donald Trump withdrew the United States from the Trans-Pacific Partnership (TPP) in 2017. The TPP has since been renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and it includes seven RCEP members, but not the United States.

• The CPTPP is a free trade agreement involving 11 countries in the Asia-Pacific region, including New Zealand, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, and Vietnam. It was signed by trade ministers on March 8, 2018, in Chile.

• The economies included in the CPTPP account for 13.3 per cent of world GDP. 

• RCEP focuses heavily on cutting tariffs and increasing market access but is seen as less comprehensive than the CPTPP. It also requires fewer political or economic concessions and has less emphasis on labour rights, environmental and intellectual property protections and dispute resolution mechanisms.

• RCEP’s market size is nearly five times greater than that of the CPTPP, with almost double its annual trade value and combined gross domestic product.

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