RCEP could be signed next year - but India won't be a part of it

Legislation | | MIC Customs Solutions |

The Regional Comprehensive Economic Partnership could become a reality as early as next year, but India is out.

After more than six years of negotiations, a group of nations in the Asia-Pacific region believes the Regional Comprehensive Economic Partnership (RCEP) could be signed next year - but India has finally pulled out of the deal.

RCEP involves all of the ASEAN nations as well as five further trading partners: Australia, China, Japan, New Zealand and South Korea.

India had been a part of talks since the beginning, but at a summit in Thailand at the start of this month, prime minister Narendra Modi announced the country would not be joining the trade pact due to concerns over how it would affect domestic producers.

This outcome was expected by some analysts, particularly after India called in independent consultants to weigh up the pros and cons last year and publicly expressed its reluctance to get involved in a deal with China.

However, trade minister Piyush Goyal had hinted as recently as September that he thought his nation would be willing to sign regardless of these concerns.

A statement from the Economist Intelligence Unit in response said: "Without India, RCEP will be less significant, but its path to implementation has become much smoother."

RCEP aims to create a free trade, zero customs duty zone and the 15 nations involved collectively make up around a third of global gross domestic product.

Once signed, it would surpass even the European Union and the North American Free Trade Agreement in its scope and reach.

Those in support hope RCEP will boost commerce by standardizing customs rules and procedures, lowering levies and improving market access. Businesses could also benefit through being able to sell their goods within the bloc but not needing to complete separate paperwork for each export destination.

The final text of the trade agreement that includes its finer details will now go through the necessary legal reviews before being signed and eventually ratified.

No formal date has been given for this, but future RCEP members seem optimistic that it may be sooner rather than later.