RCEP is proposed between the ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, Vietnam) and the six states with which ASEAN has existing FTAs (Australia, China, India, Japan, South Korea and New Zealand).
RCEP negotiations were formally launched in November 2012 at the ASEAN Summit in Cambodia. In 2017, prospective RCEP member states accounted for a population of 3.4 billion people with a Gross Domestic Product (GDP, PPP) of 49.5 trillion USD, approximately 39 percent of the world’s GDP, with the combined GDPs of India and China making up more than half that amount. RCEP is the world’s largest economic bloc, covering nearly half of the global economy and is estimated that by 2050 the GDP of RCEP member states is likely to amount to nearly 250 trillion USD with the combined GDPs of India and China making up more than 75 percent of the amount.
RCEP aims to boost goods trade by eliminating most tariff and non-tariff barriers — a move that is expected to provide the region’s consumers greater choice of quality products at affordable rates. It also seeks to liberalise investment norms and do away with services trade restrictions.
India wants auto-trigger mechanism to curb import surges
India has got massive trade deficit with China. Under these circumstances, India proposed differential market access strategy for China. To protect domestic industry against surge in imports once tariffs are brought down under the proposed Regional Comprehensive Economic Partnership (RCEP) pact, India has suggested an auto trigger method. According to it, in case there is a flood of imports (once duties are eliminated or reduced for RCEP members), after reaching a certain threshold, the auto-trigger of safeguard duties on imports should be initiated. Through this India can accord some protection to its local industry.
India is opposed to the proposed Investor-State Dispute Settlement (ISDS) body, as it does not want its domestic laws to be challenged outside India. However, RCEP countries are in favour of ISDS, because of certain issues faced by companies in India like: Operational permits of international investors in telecom companies were cancelled by the Supreme Court in the wake of the 2G scam. etc.
Rules of Origin (ROO) are yet another area where India is fighting members such as China and many ASEAN members who want relaxed rules. Rules of origin are the criteria needed to determine the national source of a product. Their importance is derived from the fact that duties and restrictions in several cases depend upon the source of imports. India wants stringent rules for ROO as it is apprehensive that in case it gives greater concession to some members in terms of market access in goods, items from other countries such as China could come into India routed through those countries at reduced duties.