Global Times |18 January 2017
India should stop roadblocking and push forward RCEP pact for its economy
India should stop acting selfishly to roadblock the Regional Comprehensive Economic Partnership (RCEP) as it takes part in negotiations of the regional trade deal. The free trade agreement could not only boost India’s economic stamina but could also extend the supply chain in Asia and instill new vigor in regional growth. Only by seeking greater market liberalization can India sustain economic momentum and prepare to emerge as a regional power. It is time for New Delhi to push forward the RCEP and open India to the outside world as Chinese leaders did decades ago when China joined the WTO.
The expected demise of the Trans-Pacific Partnership may not boost the prospect of concluding the RCEP and quarreling among bargaining participants, especially India who is reluctant to open up its markets, may complicate the RCEP’s fate, as a recent article by CNBC suggested.
The 16-member free trade pact, which links the Association of Southeast Asian nations with China, Japan, South Korea, Australia, New Zealand and India, would create one of the world’s largest trading blocs accounting for 40 percent of world trade with a combined GDP of $23 trillion. The pact, which covers diverse areas such as goods, services and investment, could extend the regional supply chain and streamline multiple Asian trade agreements if successfully inked. Its implications on the regional and world economy remain undoubted. But negotiations have dragged on with the initial deadline extended from the end of 2016 to the end of 2017. India has always been a tough negotiator and sees opening its domestic markets to cheaper goods from other countries, especially China, as a serious threat. With an average tariff level of 15 percent, India feels huge pressure to reduce tariffs dramatically to zero or less than 3 percent. However, with Prime Minister Narendra Modi’s ambition to boost the country’s export to build it into a world manufacturing hub, India needs to reform and open its market to attract foreign investment and integrate itself to the global supply chain. An insulated market would undermine its economic stamina and push it on a path toward unsustainable growth. This is particularly urgent as its growth seems to have lost traction in recent months. On Monday the IMF cut its GDP growth forecast for India for the current fiscal year (2016-17) to 6.6 percent from the previous 7.6 percent due to the negative impact of demonetization, shortly after the World Bank downgraded its growth forecast.
It would be narrow-minded for India to believe that the RCEP could benefit China or other members more. Whether India’s growth can be sustained depends on how quickly it realizes that the only feasible route is to open its market and contribute to regional integration and economic development.
It is time for India to decide whether it wants to be serious in forging progress in RCEP talks and expand its influence through more active involvement in regional economic affairs.