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15 Asia-Pacific Nations sign World’s Biggest Free Trade Pact ‘RCEP’ in 37th ASEAN virtual Summit 2020 hosted by Vietnam; India keeps out

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15-Asia-Pacific-nations-including-China,-sign-world’s-biggest-trade-pact-India-keeps-outOn 15th November, 2020, 15 Asia-Pacific countries including 10 members of the ASEAN (Association of Southeast Asian Nations) and their 5 Free Trade Agreement (FTA) partners China, Japan, South Korea, New Zealand and Australia signed the World’s largest regional free-trade agreement “Regional Comprehensive Economic Partnership – RCEP” on the sidelines of the 37th ASEAN virtual Summit 2020 hosted by Vietnam. India had pulled out of RCEP in 2019 over concerns on Imports.

Members who have signed the RCEP pact account for 2.2 Billion People with a combined Gross Domestic Product (GDP) of USD 26.2 Trillion.

Objective:

RCEP is an agreement between member states of ASEAN and its Free Trade Agreement (FTA) partners.

i.It aims to create an integrated market with 15 countries, making it easier for products and services of each of the signatory countries to be available across the region.

ii.The pact is focused on Trade in goods and services, investment, intellectual property, dispute settlement, e-commerce, small and medium enterprises, and economic cooperation.

Key Points:

i.It is expected to improve the economies affected by Pandemic by reducing tariffs, strengthening supply chains with common rules or origin and codifying new e-commerce rules.

ii.The pact includes a tariff elimination of at least 92% on Traded goods.

iii.It has provisions to address non-tariff measures and enhancements in areas such as online consumer and personal information protection, paperless trading.

iv.It includes simplified customs procedures, at least 65% of services sectors will be fully open with increased foreign shareholding limits.

v.Six ASEAN Nations & 3 Non-ASEAN nations have to ratify the RCEP within two years in order to become effective.

Reasons for India’s Withdrawal:

i.India had pulled out of the pact citing reservations that goods manufactured by China could come into India under the RCEP through other Third World Countries, and further increase the skewed trade balance with China. 

ii.India claimed that giving greater market access under the pact will harm key manufacturing sectors like steels and textiles

iii.The flood of imports under RCEP may harm local producers in India. It is also not in line with Government of India’s current priority of Boosting manufacturing

Regional Comprehensive Economic Partnership (RCEP):

i.RCEP was introduced during the 19th ASEAN meet held in November, 2011.

ii.Member States of ASEAN and their FTA partners are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam, FTA Partners –  China, Japan, South Korea, Australia and New Zealand.

Recent Related News:

i.On September 12, 2020, Minister of State (MoS) for External Affairs, V Muraleedharan participated in the online meeting of the Foreign Ministers of the Association of SouthEast Asian Nations (ASEAN) Regional Forum (ARF) under the Chairmanship of Vietnam.

ii.On August 20-21, 2020, Ministry of External Affairs (MEA) in partnership with the Ministry of Foreign Affairs of Thailand organized the two-day long 6th Round Table of ASEAN-India Network of Think Tanks (AINTT).

About Association of Southeast Asian Nations (ASEAN):

Chairman (2020) – Vietnam

Secretary General – Dato Lim Jock Hoi (Brunei) 

Headquarters – Jakarta, Indonesia