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India exits China-backed trade deal as 15 nations ready to sign

India PM Narendra Modi decided not to join the deal in order to protect service workers and farmers, officials say.
Despite exiting the trade pact, India has pushed the other 15 nations to address its concern over deficits and open their markets to Indian services and investments. Image: Bloomberg

India pulled out of a trade pact covering much of Asia, paving the way for 15 other countries to sign the China-backed regional trade deal next year.

India conveyed its decision to exit the Regional Comprehensive Economic Partnership, or RCEP, foreign ministry official Vijay Thakur Singh told reporters in Bangkok on Monday. Prime Minister Narendra Modi highlighted that he was guided by the impact it would have on the lives and livelihoods of all Indians, especially vulnerable sections of society, she said.

“India had significant issues of core interest that remained unresolved,” Singh said. “India has participated in good faith in the RCEP discussions and negotiated hard with a clear-eyed view of our interests,” she added. “We took the right decision in the national interest.”

Modi decided not to join the deal in order to protect service workers and farmers, an official told reporters in New Delhi on Monday. India had pushed the other 15 nations to address its concern over deficits and open their markets to Indian services and investments, the official said.

India’s exit from the deal removes the biggest impediment to a pact meant to cover about a third of the global economy. In the run-up to the Bangkok meetings, where Asian leaders hoped to announce a breakthrough, India made last-minute demands that irked other countries as domestic opposition increased due to worries the country would be flooded by cheap goods from China.

China has sought to accelerate the deal as it faces slowing growth from a trade war with the US, which withdrew from the Trans-Pacific Partnership after Donald Trump took office in 2017. A deal would further integrate Asia’s economies with China just as the Trump administration urges Asian nations to shun Chinese infrastructure loans and 5G technology.

The US has sought to downplay the significance of RCEP, with Commerce Secretary Wilbur Ross telling Bloomberg that it’s “not much of an agreement.” Most Southeast Asian leaders skipped a summit on Monday with US representatives after Trump decided to avoid the annual meetings for a second straight year.

“It’s not a free trade agreement, it’s not anything remotely like TPP, nor anything remotely like our separate arrangements with Japan and with South Korea,” Ross said in an interview. “So I don’t think you want to blow that out of proportion. It’s a very low-grade treaty.”

China said Monday that the 15 remaining countries decided to move forward first and India is welcome to join RCEP whenever it’s ready.

“There won’t be any problem for the 15 nations to sign RCEP next year,” Chinese Vice Foreign Minister Le Yucheng told reporters in Bangkok on Monday. “We are taking an open attitude — whenever India is ready, it’s welcome to get onboard.”

RCEP countries said in a joint statement on Monday that all participating countries would work to solve outstanding problems “in a mutually satisfactory way.”

© 2019 Bloomberg L.P.

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Who is India ?

RCEP is the 1st among a pack of aces fielded by PRC in COVID times for the struggling nations of the ASEAN ! RCEP has knitted the ASEAN into the PRC garment.

The PRC has identified for the world,the “gateway to enter PRC”, via ASEAN. As time passes,wage increases and the rise in cost of living,in urban agglomerations,will provide the impetus to outsource,and shift manufacturing,to ASEAN.Rising costs are a signal,of the obsolescence of the business model and technology – and the driver,to re-engineer the manufacturing value chain.

This outsourcing to ASEAN,will soak up the entire manufacturing capacity of ASEAN,boosting profits and wages in ASEAN nations.Chinese can partake in this wealth creation,in the ASEAN nations,as under:

Lending to ASEAN companies by Chinese Banks like CCB etc.
VC and PE stakes in ASEAN companies,with exits on the HKEX or NYSE
JV with ASEAN companies

Hence,there will be a continuous pipeline of transfer of technology and products from PRC to ASEAN at a competitive cost,and with a stand-by financing from Chinese Banks.

This will make the ASEAN people and the ASEAN governments DEPENDENT on PRC,and enable ASEAN to be partners in the PRC success story. Thereafter, excluding Nippon and South Korea,no other nation will ally with the Americans,and might also, not allow their ports,to be used by the US Navy – as the financial and economic loss,will be tangible and huge – with no ostensible strategic benefits,to the ASEAN nations.

Meanwhile PRC companies can focus on AI,Robotics and Nano to drive up the manufacturing value chain – with collaborations with EU companies and keep the Chinese skilled workers at the cutting edge of change.

Simultaneous with the above, the RCEP region (minus Nippon and Australia) can use the Yuan as the FX and even conclude agreements with OPEC or Saudis,and other Break Bulk Raw Material supply nations,to settle all purchases in Yuan (for the RCEP,as trading block).

History,Geneaology,Providence,Culture and Geography,have destined PRC and ASEAN,to be an integrated block.

What place does India have,in the block ?

Nippon and Aussies bring in technical and management excellence (which India never had )

Pakistan HAS to be given a choice to join RCEP,on the thesis that any SEZ of PRC,or a ASEAN owned SEZ o/s ASEAN, with an investment of,in excess of say,USD 35 Billion,can be DEEMED to be an EXTENSION,of the RCEP.

POST RCEP, The Path for EU manufacturers is as clear,as the white sand on a black clay beach.German manufacturers have to relocate to ASEAN, for manufacturing,and THEN export to PRC,else they will lose tarriff and non-tarriff costs,of at least 5-10%.

For those who complain about manufacturing regulations in PRC,and the costly and complex legal systems in PRC,the solution is to make in ASEAN,and seek legal redressal in ASEAN – and further,export their output to PRC.This will also secure the EU manufacturers,who wish to secure their assets,in democracies”.

The inevitable crisis of AI,Nano and Robotics,will make most humans redundant,even in EU manufacturing.The least the EU can do,is to offshore production to ASEAN,to crash the costs for EU consumers – so that,if the EU has to feed 200 million people (after they are rendered redundant),they can be fed at the lowest cost.

If the EU is PROTECTING its markets and industry, from the Chinese invasion,and thus,forfeiting unrestricted access for EU exporters to the market of PRC – that is a disaster -as the current manufacturing in EU,will ,in any case, become obsolete.dindooohindoo

End of comments.

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