After years of negotiations, India on Monday decided not to join China-backed mega Regional Comprehensive Economic Partnership or RCEP over unresolved "core concerns", with Prime Minister Narendra Modi saying the proposed deal would have adverse impact on the lives and livelihoods of all Indians.
PM Modi conveyed India's decision not to join the RCEP deal at a summit meeting of the 16-nation bloc, effectively wrecking its aim to create the world's largest free trade area having half of the world's population.
"The present form of the RCEP Agreement does not fully reflect the basic spirit and the agreed guiding principles of the RCEP. It also does not address satisfactorily India's outstanding issues and concerns. In such a situation, it is not possible for India to join RCEP Agreement," Prime Minister Modi said.
Sources told news agency Press Trust of India that China was forcefully pushing for inking the deal during the RCEP summit in an attempt to counter-balance the impact of its lingering trade war with the US as well as to project the region's economic might to the West.
"India stands for greater regional integration as well as for freer trade and adherence to a rule-based international order. India has been pro-actively, constructively and meaningfully engaged in the RCEP negotiations since inception. India has worked for the cherished objective of striking balance, in the spirit of give and take," PM Modi said.
"Today, when we look around we see during seven years of RCEP negotiations, many things, including the global economic and trade scenarios have changed. We cannot overlook these changes," he added.
"When I measure the RCEP Agreement with respect to the interests of all Indians, I do not get a positive answer. Therefore, neither the Talisman of Gandhiji nor my own conscience permit me to join RCEP," Prime Minister Modi said.
The RCEP negotiations were launched by ASEAN leaders and six other countries during the 21st ASEAN Summit in Phnom Penh in November 2012. The objective of launching RCEP negotiations was to achieve a modern, comprehensive, high-quality, and mutually beneficial economic partnership agreement among the ASEAN member States and its FTA partners.
Why India Said No To RCEP
"India conveyed its decision at the summit not to join the RCEP agreement. This reflects both our assessment on the current global situation as well as fairness and balance of the agreement. India had significant issues of core interests that remained unresolved, Secretary (East) in the Ministry of External Affairs Vijay Thakur Singh told reporters here.
Government sources told news agency PTI that Prime Minister Modi stood firm on not becoming a part of the RCEP deal as India's key concerns were not addressed.
The sources said that unresolved issues included inadequate protection against import surge, lack of credible assurances to India on market access and non-tariff barriers, possible circumvention of rules of origin by certain countries and insufficient differential with China on trade.
After India opted out, the leaders of 15 RCEP countries issued a statement resolving to sign the free trade pact next year.
Ms Singh said the Prime Minister highlighted at the RCEP summit that he was guided by the impact the deal would have on the lives and livelihoods of all Indians, especially the vulnerable sections of the society.
Asked if there was a possibility of India joining the RCEP at a later stage, she only reiterated that India has decided not to be part of it.
"India has participated in good faith the RCEP discussions and has negotiated hard with a clear eyed view of our interests. In the given circumstances, we believed that not joining the agreement is the right decision for India. We would continue to persevere in strengthening our trade, investment and people to people relations with this region," Ms Singh said.
What's Next For RCEP And India
In its statement, the RCEP countries said India has significant outstanding issues, which remained unresolved.
"We noted 15 RCEP participating countries have concluded text-based negotiations for all 20 chapters and essentially all their market access issues; and tasked legal scrubbing by them to commence for signing in 2020," according to the statement.
"All RCEP participating countries will work together to resolve these outstanding issues in a mutually satisfactory way. India's final decision will depend on satisfactory resolution of these issues," it said, keeping alive hope of New Delhi's return to the fold.
India and 15 other Asia-Pacific countries were involved in nearly seven years of negotiations to hammer out the final contours of the deal and create the world's largest free trade region.
Diplomatic sources told Press Trust of India that India came to the last rounds of negotiations in Bangkok, hoping that the issues raised by it were addressed.
The negotiations for the proposed free-trade agreement included 10 member countries of the Association of Southeast Asian Nations (Asean) and six of the bloc's dialogue partners -- China, Japan, South Korea, India, Australia and New Zealand.
If finalised, the RCEP would have become the world's largest free trade area, comprising half of the world population and will account for nearly 40 per cent of the global commerce and 35 per cent of the GDP.
India has been forcefully raising the issue of market access as well as protected lists of goods mainly to shield its domestic market as there have been fears that the country may be flooded with cheap Chinese agricultural and industrial products once it signs the deal.
"Gone are the days when Indian negotiators caved-in to pressures from the global powers on trade issues," sources said.
BJP, Congress Both Claim Victory Over RCEP
With India deciding not to join the Regional Comprehensive Economic Partnership (RCEP), the Congress on Monday claimed victory saying its forceful opposition ensured that the BJP government backs out from bartering the interests of farmers, dairy producers, fishermen and small and medium businessmen.
Congress chief spokesperson Randeep Surjewala said it is a win for all those protecting national interests.
"As BJP and Sh. Amit Shah indulge in fake credit seeking today, let them remember that Congress' forceful opposition made them back down," he claimed.
He alleged that the BJP government "had gone overboard" in its zeal to sign RCEP.
Congress general secretary Priyanka Gandhi Vadra said the BJP government was all set to sign the RCEP agreement with pomp and show but had to stall its decision after farmers unitedly opposed it and did not allow their hard work and national interests to be bartered to foreign companies and countries.
"The BJP government after crushing farmers' interests, was going to hand over the national interests of India to foreign countries by signing the RCEP agreement (anti-farmer agreement) with pomp and show. But, the farmers of the country opposed it with complete unity," she said in a tweet in Hindi.
"They gave a clear message that their hard work will not be allowed to be handed over for the benefit of foreign companies.
"The BJP government was today forced to stall its decision on RCEP agreement. I congratulate all farmer brothers and sisters. I thank the Congress party workers who supported the farmers extensively on this issue," she also said on Twitter.
Mr Surjewala said with "rampant unemployment, a sinking economy and deep agrarian crisis emanating from utter mismanagement of economy by BJP Government", signing RCEP would have been catastrophic.
"A forceful opposition by Congress and Rahul Gandhi ensures that BJP government backs down from bartering the interests of farmers, dairy producers, fishermen, small and medium businesses at the altar of political expediency (sic)," he said on Twitter.
The BJP too claimed victory over not joining the RCEP, and congratulated PM Narendra Modi for his "bold and courageous decision".
The RCEP agreement was against India's economic interest and national priorities, Commerce and Industry Minister Piyush Goyal said on Monday. He said that India has consistently stood its ground to uphold its demands particularly over the trade deficit, stronger protection against unfair imports and better market opportunities for domestic goods.
"Congratulate PM @narendramodi for his bold and courageous decision to not join RCEP, since it was against our economic interests and national priorities. Modi hai to mumkin hai!," Mr Goyal said in a series of tweets.
He added that the prime minister has shown his concern for farmers, dairy sector, MSMEs and domestic manufacturing. "This will boost Make in India," he said.
Industry, Traders And Farmers Welcome India's Decision To Not Sign RCEP
Industry, traders and farmers on Monday appreciated the Modi government's decision not to join China-backed RCEP. The country's leading milk supplier Amul described the move as "landmark".
The dairy industry had expressed apprehension that the 16-nation trade pact would severely impact dairy farmers because of cheaper imports from Australia and New Zealand. Dairy major Amul's Managing Director RS Sodhi described the move as "daring" and "landmark" which will protect the interest of 10 crore farmers engaged in production of milk and related products.
Mr Sodhi said the Prime Minister has assured the industry that the government would protect their interest.
"CII appreciates Government of India's stance on addressing all outstanding issues before joining RCEP," said Vikram Kirloskar, President, Confederation of Indian Industry. He said the CII will continue to support and work with government in its endeavour to integrate with the global economy through mutually beneficial trade agreements.
The long term interest of industry in India is to get well integrated in global value chains and beneficial trade agreements could play important roles in realizing this interest, said Mr Kirloskar.
FICCI President Sandip Somany also said the chamber fully supports the prime minister's decision against joining RCEP, as India's several concerns remain unaddressed and various issues are unresolved so far in the proposed deal under negotiation.
In recent months serious apprehensions and reservations on RCEP have been expressed by a large number of sectors including steel, plastics, copper, aluminium, machine tools, paper, automobiles, chemicals, petro-chemicals and others, he said.
Further, there were not enough positive developments in the area of trade in services including easier mobility for our professionals and service-providers, Mr Somany said.
Traders' body CAIT said Chinese products, which are very low priced and of substandard quality, are creating a disequilibrium in Indian markets. CAIT Secretary-General Praveen Khandelwal appealed to the Prime Minister that after "this landmark move", the government should now work dilligently towards creating a more conducive environment for retail trade in India and also erase all anomalies and disbalances created by the Law violating e-commerce companies.
Farmers too praised the move not to join the RCEP. Commenting on the move, All India Kisan Sangharsh Coordination Committee (AIKSCC) it is happy that "good sense" has prevailed on the government and its decision to barter away the life and livelihood of crores of farmers, workers, and small businesses, has been averted.
"AIKSCC sincerely hopes that this Government will not try any back-door method of sabotaging the interest of Indian farmers and farm-workers through trade deals," it said in a statement.
Nitin Kunkoleinker, President, MAIT said the decision is "a very encouraging step" for Indian manufacturing, especially the IT and electronics manufacturing sector, as it reiterates the government's strong support to the industry's growth.