Critically examine the differences that have complicated Regional Comprehensive Economic Partnership (RCEP) Agreement? (200 words)
Refer – Financial Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 6 years
KEY POINTS
Diversity of RCEP
· RCEP, the world’s largest free-trade agreement (FTA) covering almost half of the global population is bound to have difficulties in matching ambitions among its members.
· The RCEP includes some of the world’s wealthiest economies (for example, Australia, Singapore, New Zealand) along with the largest (China, Japan, India, South Korea) and small low-income economies (such as Cambodia, Myanmar, Lao PDR).
· Not only do RCEP members have different visions of world trade, but also different qualities of domestic economic institutions, regulations and comparative advantages.
Differences
· It is exceedingly difficult to hit common ground among members even on basic issues core to all FTAs, such as elimination of tariffs and effective Rules of Origin (ROOs).
· A large part of RCEP negotiations have focused on agreeing upon a common schedule of items for eliminating tariffs among members.
· If agreeing to a common programme for cutting tariffs has been so tough, one can imagine the difficulty the RCEP has had in progressing on new-generation trade issues like services, investment, intellectual property and e-commerce.
· It’s not just economic differences that have complicated RCEP talks.
· Mistrust among members, particularly non-ASEAN members without bilateral FTAs between them, has also created problems.
· These include examples like India and China, and China and Japan, who, in spite of being large trade partners of each other, don’t have FTAs and have never negotiated trade agreements among themselves.
· Apprehensions over granting each other ‘extra’ market access by agreeing to a common programme of tariff cuts, or services and investment rules, have, therefore, been major hurdles to progress.
Significance
· Even if a low-quality RCEP comes through, it will bring some cheer for the moribund world of international trade.
· Apart from being the largest FTA signed, it will be a prominently ‘inclusive’ agreement.
· It would be the first such deal to include low-income and least developed countries with special provisions in spite of scoping new-generation trade issues.
· At a time when the World Trade Organisation (WTO) is sluggish and struggling to deliver, the RCEP can recharge global trade prospects by positing a template for 21st-century trade that accommodates the smaller players in global trade as well.
