Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) between the countries of Association of South East Asian Nations (ASEAN) namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam and the six states with which ASEAN has free trade agreements (Australia, China, India, Japan, South Korea and New Zealand).
RCEP is considered as an alternative to the other important multilateral treaty named Trans-Pacific Partnership (TPP). The TPP agreement excludes two of the important Asian powers – China and India.
The Potential of RCEP
- RCEP member states accounted for a population of 3.4 billion people and a total Gross Domestic Product of $49.5 trillion.
- It is seen that the total GDP in RCEP could grow over to $100 billion by 2050 if the growth of the countries like China, India and India continues to be high.
- On Jan 23, 2017, US President Trump signed a memorandum stating the withdrawal of the US from the TPP, a move which has turned the focus of the world towards RCEP.
- RCEP will cover trade in goods, trade in services, investment, economic, technical cooperation, intellectual property, dispute settlement and other issues.
Importance of RCEP for India
The RCEP provides an opportunity for the success of India’s Act East policy and will also influence the economic stature of India among the other South Asian countries.
Also in comparison with the TPP & TTIP groups of countries, India’s trade with the RCEP group of countries as a percentage of its total trade has increased over the past decade. This shows the importance of RCEP to India.
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The three immediate benefits of RCEP to India are::
- RCEP agreement would complement India’s existing free trade agreements with ASEAN nations and some of its member countries. The goal of greater economic integration with the countries of South East Asia and East Asia can be achieved through RCEP. India will have access to vast regional markets of these countries thereby helping its economy.
- RCEP will facilitate India’s Integration into regional production networks harmonizing trade-related rules. India is not a party to two other important regional economic blocs namely Asia- Pacific Economic Cooperation and Trans-Pacific partnership and thus RCEP would play an important role in strengthening its trade ties with these countries.
- India enjoys a comparative advantage in areas such as ICT, IT-enabled services, healthcare, and education services. RCEP would help in attracting greater FDI into these areas.
Importance of RCEP for China
- Regional Comprehensive Economic Partnership is the key point of accelerating the implementation of the FTA strategy in China.
- The members of the RCEP are all important trade partners ofChina.
- The establishment of the RCEP is in the strategic interest of China. It is the largest FTA China has ever negotiated on.
- China is fighting hard for establishing a new set of economic and trade rules outside the influence of USA and RCEP will help in this endeavour.
- This would help in the domestic economic development further strengthening China’s position in the global arena.
- China was excluded from the other important agreement TPP and thus RCEP provides an opportunity for better economic and peaceful relations with the neighbouring countries necessary for China’s rise.