Chinese Negotiations With India At Cambodian Meet Will Be Key To Regional Comprehensive Economic Partnership
By
Colonel Awadhesh Kumar, Special Forces
Chinese were very sanguine or rather over confident regarding the universal acceptance of their One Belt One Road Initiative and also the success of their China Pakistan Economic Corridor.
In their over confidence they brushed aside the Indian objections on CPEC with respect to the Indian Sovereignty issue involved due to inclusion of POK ie illegally Occupied areas of India’s Kashmir by Pakistan. They also failed to answer various issues of OBOR to India’s satisfaction.
Then to their dismay, the response received from the World community for OBOR was initially lukewarm and later it became quite cold. Also both the CPEC and its showpiece the Gwadar Port started losing its sheen and now the entire project is in doldrums. All because of India’s refusal to participate in such unilateral initiatives.
Now once again Chinese are jittery, this time they are concerned with the agreements which are to be negotiated at the Regional Comprehensive Economic Partnership (RCEP) meet On 09 March in Cambodia.
Trade ministers from 16 Indo -Pacific countries are gathered in the Cambodian city of Siem Reap to resume negotiations over the proposed RCEP.
This partnership aims to create one of the world’s largest trading blocs encompassing 45 percent of the world’s population and 40 percent of global trade.
The participating countries hope to reach a final deal by the end of this year, a deal which is beneficial to all the members without any prejudice.
Talks between India the third largest economy in the world by PPP and Japan, the fourth largest economy by PPP have been progressing smoothly for quite sometime. Japan and South Korea are also negotiating various trade terms bilaterally.
ASEAN are already a trade block in themselves, so it is China whose overbearing attitude towards its smaller neighbours around South China Sea which has postponed the conclusions of the talks from last year. Defending the smaller countries from the Chinese trade onslaught has been India.
The key concern from India over the RCEP is that a free trade deal for every one, once it comes into effect, will provide a huge but unequitable advantage to cheap low quality Chinese goods.
As such it will be difficult for the domestic market and manufacturing sectors of other members of the RCEP to withstand such an impact.
India is fully aware of such trade deficits as due to mistakes made by previous Indian Government, India’s trade deficit with China has surpassed $40 billion and needs proper re balancing. The RCEP may eliminate tariffs on 80 to 85 percent of goods.
Therefore it seems understandable for the South Asian and South East Asian countries to be cautious toward this kind of high-level trade agreement in the short term in order to protect their domestic market.
In fact, considering that India already has free trade agreements with ASEAN, Japan and South Korea, the RCEP negotiations for India are more like free trade talks with China, and the trade balance between the two is a big problem that cannot be circumvented.
The Chinese always try to display a superiority attitude that its trade imbalance with India is the result of an imbalanced Indian economic structure because of the underdeveloped manufacturing sector in India.
Whereas India and other countries quickly point out that the root cause is China limiting access to its markets. China has been accused by one and all for the slowness in opening up its market to India and other countries.
It is only after the informal meeting between the top leaders in Wuhan, that China has started importing pharmaceutical products and agricultural products like non-basmati rice, fruits, cotton and sugar from India.
This means there is little change to the trade deficit problem and is a cause of the delicate trade relations between the two countries.
China must continue to open its market to India, and demonstrate its sincerity on the issue. Only then reluctance toward the RCEP by most of the countries will start changing.
China is realizing that its economy is slowing down and its trade war with America and entanglement in POK has inflicted certain damage to its economy. So it will not be willing to be really excluded from the RCEP.
In fact, the RCEP is one of the few existing paths for the country to participate in the global value chain, which is slowly becoming centered around the Indian Ocean Region and Indo Pacific region.
Nowadays, amid rising anti-globalization sentiment, regional trade agreements have rapidly emerged as a major tool for promoting trade.
ASEAN, BIMSTEC and SAARC are already moving forward at great pace and RCEP will further enhance the importance of this region.
The RCEP agreements will form a true Indo Pacific free trade zone, which will generate development worth hundreds of billions of dollars.
For India, a final RCEP deal will be an achievement reminding of the days of Cholas, Pallavas and Magadh days. India and Southeast Asian countries are eagerly anticipating concluding such a deal which will benefit everyone.
Currently, China is negotiating with India and Japan on issues of phasing out its tariffs on foreign goods. China is especially eager to reach an agreement, because it knows that without Indian consent, China will not be able to make much inroads in the IOR. the RCEP is an opportunity which China must seize with both hands.
