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The victory of India at RCEP meeting.
UPSC PERSPECTIVE
This topic is very important for General Studies Mains Paper 2 under the topic IR (International Relations) Regional Comprehensive Economic Partnership.
It is an idea of a free trade agreement for countries like ASEAN Members (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) and the six Asia-Pacific states (Australia, China, India, Japan, South Korea, and NewZealand).
Some countries should be united under the free trade agreement in terms of market access.
Diminishing all the borders in terms of the market.
Lets us take a hypothetical example regarding it and know more about the RCEP.
Suppose one of the Australian company manufactures soap and they want to sell their soap in India. Let the cost of the soap be 100.
India will protect its own soap manufactures (eg lux, dove etc) and will put the tariff of 20 Rs on the Australian soap.
Hence, Indians will have to pay 120 rs for the Australian soap and Indian soap be of 100 rs.
Under RCEP any country can sell its product in another country at the minimum tariff.
RCEP is a revolutionary idea and when it gets successful there will be a positive drift in the economy for a respective country hence providing a economic stability.
WHAT WORRIES INDIA?
Some hurdles are there in RCEP because there are some issues between India and China like trade deficit between them.
We buy a lot from China. Eg: solar panels bought fromChina are not tariff-free.
In RCEP china can get a direct access to the Indian market and that worries the Indian government. China will capture the Indian market in a decade and thiswill not be good for our country in the long-term.
WHAT JUST HAPPENED?
India is planning to pull itself out from RCEP and this is itself a big news.
Is it a loss of opportunity?
To solve this PMO asked for the advice of Suresh Prabhu(Trade Minister)
Suresh Prabhu puts these two concerns in front of the RCEP members
1.India’s concern regarding China.
2.Regarding skilled professionals movement. This meeting happened in Singapore.
RCEP members have agreed to them. FOR India RCEP is Postponed for one
more year.
There has been an inevitable linkage between services and goods negotiations, because RCEP is not a goods agreement alone, and services must be an integral part of the agreement.
India is very good in service sector like IT etc as campared to goods.
SKILLED WORKERS (gift for India) RCEP countries will open up opportunities for India’s
skilled professionals seeking gainful employment.”MODE 4″ of RCEP says that
skilled , talented and educated youth can go to RCEP countries for work.
TRADE DEFICIT
1. India has a trade deficit with other 10 RCEP countries including China, South Korea, and Australia also.
2. People from the agriculture and dairy sector are telling to be not a part of RCEP countries, cause in coming time these countries can capture our market aggressively and we will have to face the problem and it will not be possible to put tariff at that time.
India’s exports to RCEP account for about l5% of its total exports and imports from RCEP comprise 35% of the total imports.
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