Fifteen Asia-Pacific nations have inked the Regional Comprehensive Economic Partnership (RCEP) trade agreement, slated to become the largest trade pact in the world. India, however, remains outside the pact as per its decision last year to pull out of negotiations over concerns of cheap Chinese imports flooding the Indian market. Those concerns have only been amplified this year with India and China locked in a border standoff in eastern Ladakh. There is welcome recognition in New Delhi that Beijing represents its biggest strategic security challenge today and economically decoupling from China is in India’s best interests.
After all, China plays by its own set of opaque trade rules and there are serious concerns about its influence in sensitive sectors such as telecom and 5G. China can use tech equipment here to carry out espionage and cyberattacks, a concern that even RCEP member Australia has raised. In fact, most RCEP members are concerned about China’s predatory practices and aggressive foreign policy. This means there are inherent tensions within the RCEP architecture.
But while India has done the right thing in walking away from RCEP, it should not close the door on free trade agreements altogether. We need them to boost trade, access markets and capital, import the latest technologies and increase our competitiveness. Else, India is doomed to low growth as in the pre-1991 years. With the incoming Joe Biden administration in the US likely to take a more strategic view of trade, concluding an FTA with Washington is possible. Similarly, we should conclude an FTA with the EU, and be prepared to join the Trans-Pacific Partnership trade pact if the US rejoins it. Countering China requires us to grow our economy quickly. This can’t be achieved without a liberal trade policy with the right partners.
This piece appeared as an editorial opinion in the print edition of The Times of India.