BANGKOK: Backed by China – and excluding the United States – the sprawling Regional Comprehensive Economic Partnership (RCEP) was poised to link half the world’s people.
But it took a hit at the close of a three-day Association of Southeast Asian Nations (ASEAN) summit in Bangkok Monday after India said it would not join the deal.
WHAT IS RCEP?
Launched in 2012, RCEP is a trade pact between the 10-member ASEAN bloc, along with China, Japan, South Korea, Australia, New Zealand and until recently, India.
It was supposed to link around 3.4 billion people and cover about 40 per cent of global commerce.
Without India’s vast population, the deal will now include 2.1 billion people.
Its aim is to break down trade barriers and promote investment to help emerging economies catch up with the rest of the world.
WHY DOES IT MATTER?
It mainly matters because it doesn’t include the US – and is notably being backed by Beijing.
Observers say it will cement China’s domination over its backyard, where it faces little competition from America since President Donald Trump pulled out of a trade pact of its own.
That deal, called the Trans-Pacific Partnership (TPP), was on track to be the world’s biggest trade pact, until Washington pulled the rug out from under it, saying it funnelled off US jobs.
With Washington and Beijing embroiled in a trade spat of their own, RCEP’s backers are hoping to finalise the deal next year even without India.
WHAT WAS INDIA OPPOSED TO?
A few things.
It raised alarm about market access issues, fearing its domestic producers could be hard hit if the country was flooded with cheap Chinese goods.
Textiles, dairy, and agriculture were flagged as three vulnerable industries.
Prime Minister Narendra Modi faced mounting pressures at home to take a tougher stance on the terms, and proved unbending as the RCEP negotiations came to a close.
Thailand was pushing to have the deal finished this year but a final agreement might not come until 2020 now.
READ: Negotiation outcome a major step forward for RCEP, India’s position respected and understood: PM Lee
WHAT ARE THE ODDS?
Despite the dramatic pullback from India, odds are still good for the ASEAN bloc to conclude the deal next year in Vietnam.
Diplomats also say India can still join if it changes course.
But it remains to be seen what impact the decision of a country with 1.3 billion people will have on the pact’s prospects.
“I will leave it up to the political masters to decide,” said Iman Pambagyo, a negotiator involved with the RCEP talks.