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View: RCEP is important for China; India has the option to join later on its own

Post time:2019-11-11 13:26:41
There’s going to be much debate on whether rejecting the Regional Comprehensive Economic Partnership (RCEP) is best for India, from the standpoint of trade, employment et al. What matters to China more is the political and diplomatic issues linked to RCEP.
China is so shaken by the ‘trade war’ with the US that its leadership’s ability to deal with US President Donald Trump is being watched very closely both in China and abroad. The signing of the 15-nation RCEP, which has Japan, Australia and South Korea as members, would be a show of muscle against Washington.
India’s refusal to join the group, and thus refusal to strengthen it further, needs to be seen in this political context. Already, experts in China are saying that India’s action may be partly influenced by the US. “It is possible that New Delhi uses its decision to quit RCEP as a bargaining chip in trade negotiations with the US and approach Washington by putting the US above RCEP on trade deals,” said Mao Keji, research fellow at the Institute of India Studies, affiliated to the Statecontrolle ..
No one is expecting the US to reward India, or even take a soft line in dealing with Indian companies on the trade front. But India’s decision is a setback for China, both in terms of its world image, and the need to tackle the trade war.
So, will Prime Minister Narendra Modi’s decision affect China’s plans to expand buying of Indian medicines, particularly cancer drugs, in a big way? There may be some temporary drag in negotiations.
As it has done with western companies, Beijing wants Indian pharma firms to enter into joint ventures with Chinese companies, or establish their production centres in China. Indian companies are not too enthusiastic, as they rightly fear theft of process technologies that give India’s pharma industry an edge over China’s.
But there is rising resentment across China against unaffordable drugs, and a groundswell of demand for low-cost Indian medicines. This is apparently from the large-scale smuggling of Indian drugs — and a government-approved Chinese move emphasising the need for allowing Indian medicines to be brought in through legal channels. Besides, there is growing violence against doctors and other medical staff owing to resentment over high costs.
At another level, there are clear signs that foreign companies, particularly from Europe and the US, have cut back on their investment programme for 2020, since they expect the stand-off between the US and China to continue. Already, the US aggression towards China has spread from trade to investment and technology areas.
Beijing can hardly hide its determination to push through RCEP. It also wants to keep the 10-member Association of Southeast Asian Nations (Asean) closely tied to itself. China has managed to also obtain signatures from Japan, Australia and South Korea, making RCEP a multilateral animal that Washington cannot ignore. There are signs China and other RCEP members will go forward with the group’s activisation even if India stays away.
But India’s foreign policy implications are going to be different. China respects a country that can stand on its own turf and not be swayed easily. This move, by itself, could force the group to renegotiate terms and listen to Indian demands more carefully. It could also ensure an open door for India to act whenever it wishes to enter RCEP. Whatever the perceived loss, it will be temporary.
 
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