TNPSC Thervupettagam

East Asia Summit & RCEP

November 14 , 2019 1683 days 4628 0
  • During three-day visit to Thailand, Prime Minister Narendra Modi has attended the ASEAN-India, East Asia and Regional Comprehensive Economic Partnership (RCEP) summits to strengthen regional cooperation in key areas such as trade, maritime security and connectivity.
  • He also highlighted the need for working together to find out common solutions. 

East Asia-Summit
  • The East Asia Summit (EAS) established in 2005.
  • It is a forum of 18 regional leaders for strategic dialogue and cooperation on the key political, security, and economic challenges facing the Indo-Pacific region.
Genesis
  • The concept of an East Asia Grouping was first promoted in 1991 by the then Malaysian Prime Minister, Mahathir bin Mohamad.
  • The first summit was held in Kuala Lumpur, Malaysia on 14 December 2005.
  • Kuala Lumpur Declaration:
    • EAS is an “open forum” for dialogue on strategic, political, and economic issues in order to promote peace, economic prosperity, and regional integration in East Asia.
  • India is a founding member of the East Asia Summit.
  • 14th East Asia summit was held in Bangkok, Thailand.
Membership
  • The EAS comprises the ten member states of the Association of Southeast Asian Nations (ASEAN) along with 8 members - Australia, China, Japan, India, New Zealand, the Republic of Korea (South Korea), Russia and the United States.
  • Ten member states of the ASEAN are
    • Brunei,
    • Burma (Myanmar),
    • Cambodia,
    • Indonesia,
    • Laos,
    • Malaysia,
    • Philippines,
    • Singapore,
    • Thailand,
    • Vietnam.
  • The EAS membership represents around 54% of the world’s population and accounts for 58% of global GDP.
  • The EAS is an ASEAN-centred forum; it can only be chaired by an ASEAN member.
EAS Chair
  • The chair of ASEAN is also the chair of the EAS.
  • The role of the ASEAN chair rotates annually between the ten ASEAN member states.
  • 2018 chair: Singapore
  • 2019 chair: Thailand
Areas of Cooperation
  • India endorses regional collaboration in all six priority areas.
    • Environment and Energy
    • Education
    • Finance
    • Global Health Issues and Pandemic Diseases
    • Natural Disaster Management
    • ASEAN Connectivity
Potential
  • EAS, representing nearly 50 per cent of the world’s population and over 20 per cent of global trade, is a mega gathering and is a testimony to the rise of Asia.
  • EAS is a region of strong and fast-growing economies.
  • It is considered the third pole of world economy after the US and Europe.
  • Its four major economic players namely Japan, China, India and Korea are among the twelve largest ranking global economies.
  • Financial and monetary cooperation between ASEAN+6 or EAS countries could be an area of fruitful cooperation in view of the fact that their combined foreign exchange reserves exceed $ 3 trillion.
  • Steps can be taken towards creating an Asian financial architecture that would facilitate partial mobilisation of these reserves for narrowing the development gaps in Asia.
14th East Asia Summit
  • East Asia Summit is a leaders-led platform, where discussions are held on various developments in the region.
  • The agenda for this edition of the summit was to review the future direction of East Asia Summit co-operation and exchange views on regional and international issues.
  • The East Asia Summit is the premier forum in the Asia-Pacific region to deal with issues relating security and defence.

Significance for India:
  • For India, EAS acts as an alternative to the APEC (Asia Pacific Economic Cooperation) in which India doesn’t enjoy the membership.
  • India’s membership to the EAS is a recognition of its fast growing economic and political clout.
  • Act East policy of India:
    • In order to build multi-faceted relations with ASEAN and other multilateral nations and strengthen bilateral relations, India has emphasised upon its Act East Policies for which EAS will prove crucial.
  • India’s deep cultural and civilizational links with the EAS countries are widely known.
RCEP
  • RCEP is proposed between the ten member states of the ASEAN and the six states which has existing Free Trade Agreements.
  • Ten member states of the ASEAN are
    1. Brunei,
    2. Burma (Myanmar),
    3. Cambodia,
    4. Indonesia,
    5. Laos,
    6. Malaysia,
    7. Philippines,
    8. Singapore,
    9. Thailand,
    10. Vietnam
  • Following are the six states with which ASEAN has existing FTAs
    1. Australia,
    2. China,
    3. India,
    4. Japan,
    5. South Korea and
    6. New Zealand
  • RCEP negotiations were formally launched in November 2012 at the ASEAN Summit in Cambodia.

Aim
  • RCEP aims to boost goods trade by eliminating most tariff and non-tariff barriers — a move that is expected to provide the region’s consumers greater choice of quality products at affordable rates.
  • The purpose of RCEP is to create an "integrated market" spanning 16 countries.
  • It also seeks to liberalise investment norms and do away with services trade restrictions.

Significance  

  • When inked, it would become the world’s biggest free trade pact.
  • These 16 nations account for a little less than half of the world’s population and about a third of the world’s GDP.
  • Trade between the 16 countries also makes up a little more than a quarter of global trade.
  • This is because the 16 nations account for a total GDP of about $50 trillion and house close to 3.5 billion people.
  • India (GDP - PPP worth $9.5 trillion and population of 1.3 billion) and China (GDP - PPP of $23.2 trillion and population of 1.4 billion) together comprise the RCEP’s biggest component in terms of market size.

Recent news
  • Broadly speaking, it would lower tariffs and other barriers to the trade of goods among the 16 countries that were in, or had existing trade deals with ASEAN.
  • But that’s now down to 15 nations?
  • Correct. India pulled out saying it wanted to protect service workers and farmers.
  • India has decided not to join the RCEP deal as negotiations failed to address New Delhi's outstanding issues and concerns.
  • For now, the remaining 15 nations have decided to go ahead with the agreement without India.
  • China, however, announced that India is welcome to join the RCEP whenever it is ready.
India’s issues with RCEP
  • The main problem Indian industry has with the RCEP trade deal is that it would give China near-unfettered access to the Indian markets.
  • Cheap imports from China have already been seen to be impacting India’s domestic industry, with the Indian government having taken a number of steps to curb such imports.
  • According to reports from the various RCEP negotiations that have taken place, India would, under the agreement, reduce duties on 80% of items imported from China.
  • While this is a smaller percentage of items as compared to what India is prepared to do for other countries, the figure has nevertheless spooked Indian industry, especially the agriculture and dairy sectors.
  • Under the agreement, India would have to cut duties on 86% of imports from Australia and New Zealand, and 90% for products from ASEAN, Japan and South Korea.
  • There are several other aspects to the RCEP agreement which include investments and e-commerce that are of major concern as well.
Indian demands
  • Base year – Shifting the base year for tariff cuts from 2014 to 2019.
  • Import surge – avoiding a sudden surge in imports from China by including a large number of items in an auto-trigger mechanism.
  • Rules of origin – stricter rules of origin to prevent dumping from China
  • Services – a better deal in services.
Indian concerns
  • Negotiations on the details of the RCEP have been on since 2013, and all participating countries aim to finalise and sign the deal by November, 2019.
  • Trade deficits
    • India runs large trade deficits with at least 11 of the 15 RCEP members.
    • China alone accounts for $53 billion of India’s $105 billion trade deficit with these.
  • Domestic industry
    • China’s need for greater access to the Indian market to sustain its manufacturing industries.
    • It will hurt the Indian industry and farmers due to a surge in Chinese imports.
  • FTA experience
    • India’s experience with FTAs has been underwhelming.
    • Niti Aayog suggested that FTA utilisation is in the 5%-25% range.
  • Domestic opposition
    • Domestically, the RCEP generated considerable opposition with major stakeholders coming out against it – farmers, dairy industry or the corporate sector.
  • There are demands by other RCEP countries for lowering customs duties on a number of products and greater access to the market than India has been willing to provide.
  • So, the Indian government has decided not to join the Partnership.

 

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