Sabyasachee Dash & Bejon Misra
The Regional Comprehensive Economic Partnership (RCEP) was dealt a blow when India made a last-minute, unsurprising withdrawal from the seven-year-old negotiations during a series of weekend meetings of Asian governments in Bangkok. India’s action is seen as an inward turn to swadeshinomics.
RCEP is being negotiated among 16 countries comprising the 10 ASEAN members, Japan, China, South Korea, Australia, New Zealand and India. If the agreement gets signed and takes effect, it would cover 47 per cent of the world’s population, about 30 per cent of the world’s GDP and 33 per cent of the world’s exports; it would involve 8 of the 10 busiest ports of the world, and 30 per cent of the world’s maritime trade. The deal is not just about commerce, but also about investments, and is expected to account for 32.5 per cent of global investment flows, if sealed.
India has opted to stay out of the deal for now as its demands were not met during the negotiations. The move will likely make other countries wary of negotiating with India over other future trade and investment deals. This could align it more closely with the US and the still novel “Indo-Pacific” geopolitical concept, which though originating in Japan over a decade ago, has been taken up with gusto by the Trump administration as an alternative to the Asia-Pacific.
RCEP has been widely described as relatively superficial, compared with the close-knit arrangements seen inside the 28-country European Union, or even the CPTPP, an 11-country pact taking in seven of the RCEP countries, as it focuses mostly on tariff reduction in what is already a low-tariff region. And though “the direct economic benefits from RCEP are likely to be relatively small”, according to UK-based Capital Economics, the main impact for now is likely to be political, with China, “in contrast to a protectionist US”, casting itself “as a champion of globalisation, while not committing it to any structural reform or roll-back of the industrial policy that benefits its firms over foreign competitors both within China and abroad”.
Farmer leaders have claimed India’s holding back as a victory of farmers’ movements in India, which kept the government under pressure to prioritise citizens’ interests over those of investors and corporations.
RCEP must be understood in the context of Indian farmers already receiving a battering in global trade agreements. It may be ideal that the government puts out the various deals that it is negotiating in the public domain and creates a feedback mechanism
The worries of farmers’ movements pertain to direct impacts on milk producers and other producers such as that of plantation products (oil palm, coconut, pepper, cardamom, rubber and coffee among them). Besides, there is apprehension that oilseed producers will be impacted by cheaper palmolein products from Southeast Asia and threats to wheat and cotton producers. There are also concerns about farmers’ seed rights and seed freedoms if RCEP pushes India towards a UPOV regime. While it is being said that IPR provisions have been renegotiated, the threat is not likely to vanish. Investor-State-Dispute-Settlement provisions in RCEP and data localisation in the context of e-Commerce are among other concerns that persist with RCEP.
Further a section within experts believes the current context of Indian economy as well as the never before pronounced agrarian crisis in the country must be kept in mind too, when negotiating such deals, specially at a time when the country is witnessing rapid deceleration in growth of the economy, businesses are slowing down if not shutting down, unemployment is alleged to be on the rise and worst of all farmers’ suicides are continuing unabated. As a matter of fact, there is little scope to have any development that has even remote adverse impacts on the rural economy in particular.
RCEP must be understood in the context of Indian farmers already receiving a battering in global trade agreements. It may be ideal that the government puts out the various deals that it is negotiating in the public domain and creates a feedback mechanism. State governments should also assert their authority in this context.
The argument of the Union Commerce Minister that inefficiencies of our producers cannot be protected anymore has not gone down well with major stakeholders. The counter to the minister’s views has been that other producers are receiving far greater subsidies than those from India, and that our farmers have been negatively subsidised. This was also captured clearly in an OECD study last year. What is also important to realise is that reliance on cheaper imports does not help the cause of growth in the country and will only get us into a vicious spiral of increased unemployment and losses, with our production, and the purchasing power of producers getting affected. The fundamental question needs to be answered before the domestic constituencies could be: As a country have we been doing enough to look after our farming community?
While a novel initiative such as soil testing was in current government‘s to-do list, the same had to be complemented with several other sets of measures to enable farmers to earn a better yield and improved realisations consequently. In the absence of relevant affirmative steps, it has turned out to be mere tokenism. Clearly, the interests of farmers have been neglected for decades, owing to the visible dearth in political will; the resulting agrarian distress has been compounding at an unimaginable speed to unprecedented magnitude. It is common wisdom that unless we commit the required energy and resources towards the agriculture sector under firm action plans with commensurate monitoring mechanism, alternative measures would seldom ensure desired balanced growth in a country where more than 70 per cent of its population depends on agriculture for their primary living. It is high time green revolutions are revived in recognition of best practices in the rest of the world with a caution of not losing focus on indigenous realities, before problems become accentuated further. It is too big and pervasive an issue to be left to get resolved on its own.
Sabyasachee Dash is a chartered accountant. Bejon Misra is a consumer policy expert.