Regional Comprehensive Economic Partnership signed, India remains outside
Delhi, Nov 16: In 2012, 16 countries started talking to each other. They wanted to create the largest free trade agreement in the world.
These 16 countries were the 10 ASEAN countries (Brunei, Cambodia, Indonesia, Lao, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam), Japan, India, China, Australia, Korea, and New Zealand.
The history of India in RCEP
In November 2019, India walked out of the RCEP agreement. India felt that its issues were not being heard or addressed by the larger team. Today, the remaining 15 countries formally signed the agreement. They have expressed hope that India will come back to the table for further discussions and will, hopefully, join the group.
Why is RCEP a special agreement?
The agreement is led by China. This agreement covers about 30% of the world’s population (2.2 billion people) and about 30% of the world’s GDP.
Countries that are a part of this agreement can sell and buy from each other at lower prices, by paying lower taxes on products and services from member countries.
| What is Free Trade Agreement? Ram makes jalebis and Shyam makes toys. Ram sells jalebis to Shyam and vice versa. But every time they sell to each other, they have to pay 20% to their fathers. This is called ‘tariff.’ One day, Ram and Shyam decide, let’s not pay anything to our parents. You can sell to me, and I can sell to you. No tax at all. This is called a Free Trade Agreement – where countries can sell to each other freely, without any taxes. Many countries get into Free Trade Agreements, either with each other, or as a group. RCEP is an example of such a Free Trade Agreement. Read more here: https://kidsnews.top/what-is-free-trade-agreement-fta/ |
Why did India stay away?
There are many reasons that India walked away from this agreement. The most important reasons are:
- India has a territorial fight with China. In the recent past, India has banned Chinese investment, apps, and other products. If India signs this agreement, Chinese products can enter India freely.
- Many of these countries produce things much cheaper than India. It is possible for the industry in these countries to sell a lot of cheaper products to India. This will hurt India’s own industry.
- India has a trade deficit with most countries in the group. This means that India imports more from these countries than it exports to them. Giving them even lower taxes (called tariffs) will mean that this gap might increase even more.
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