On November 4, at the 35th ASEAN Summit in Bangkok, Thailand, all 15 signatories to the Regional Comprehensive Economic Partnership (RCEP) said they are prepared to sign the deal next year - except for Indian Prime Minister Narenda Modi. He decided to postpone signing until “important issues” are resolved.
What Modi was really saying is that India needs to be properly protected against the impact of surging imports after endorsing RCEP, Zhang Yang, a research fellow with the Chongyang Institute for Financial Studies, the Renmin University of China, wrote in an opinion piece for guancha.cn.
The researcher attributed Modi’s decision to four factors. First, Modi believes the interests of large enterprises and small traders merit protection, and made it clear in Bangkok that the RCEP deal does not meet that requirement.
As the leader of India, Modi also has to consider the interests of all parties concerned, as a precondition to win majority support.
Next, India’s domestic political environment pushed Modi, he argued. Aside from the strong criticism from the opposition Congress Party, Modi’s supporters, including the SJM, also opposed it. India's steel, automobile, dairy and textile industries have expressed concerns over the impact of imports from other RCEP countries.
In the past, India’s economic opening hit domestic industry, which lost some of their domestic markets to foreign companies. At the summit, India sought for a protection mechanism to increase tariffs on some imports when they exceed certain amounts, and expressed important concerns about market access and non-tariff barriers. Yet they were not met with positive responses.
Zhang predicted that India would postpone signing the RCEP again in 2020. Instead, India could consider first opening up some coastal provinces and promoting local trade exchanges, he suggested.
But India's signing of the RCEP is not out of the question, though it will be a long process. Modi said during an interview in Bangkok that India is still committed to a comprehensive and balanced outcome of the RCEP negotiations, but it hopes for win-win results. And the Indian Federation of Industries said that if it does not join the RCEP, it would not be conducive to India's exports and investment flows.
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