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Regional Comprehensive Economic Partnership (RCEP) comes into effect

  • Category
    International Relations
  • Published
    3rd Jan, 2022

Context

The Regional Comprehensive Economic Partnership (RCEP) agreement, the world's largest free trade agreement, entered into force on January 1, 2022.

About

What is RCEP? 



  • RCEP is a free trade agreement between Asia-Pacific nations of Australia, Brunei, China, Cambodia, Japan, Indonesia, Laos, South Korea, Malaysia, New Zealand, Myanmar, Singapore, Thailand, the Philippines, and Vietnam.
    • India and the United States are not members of RCEP. 
  • The 15-member grouping accounts for 30% of the world’s population and 30% of global GDP (2.2 billion people). Thus, it is the largest trade bloc in history.
    • By comparison, the United States-Mexico-Canada trade agreement (USMCA) covers 28% of world trade, while the European Union's Single Market is a distant third at nearly 18%.

Background

  • Negotiations on the RCEP deal started in 2012. 
  • India was also part of the negotiations. However, India pulled out in 2019 because of concerns over lower tariffs. 
  • Before India, RCEP excluded the USA, which had withdrawn from the Trans-Pacific Partnership (TPP) in 2017.

Why did India opt out?

India was a member of the RCEP drafting committee from its inception in 2011, but in November 2019, it decided to opt out.

  • Concerns regarding China: India did not join RCEP raising a concern that this deal would open it up to Chinese goods.
  • Safeguarding domestic interest: Its decision was to safeguard the interests of industries like agriculture and dairy and to give an advantage to the country’s services sector. 
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