On Monday, India decided that it won’t sign the Regional Comprehensive Economic Participation agreement. While India decided to pull out, the other 15 members of RCEP arrived at a consensus and are likely to formally announce the regional trade pact next year. The government claimed that its decision to pull out of RCEP showed “India’s rising stature in the world”. A key reason that India forwarded for declining to sign on was the existence of trade deficits with many of the constituents of the RCEP. For instance, against the 10-member Association of Southeast Asian Nations (Asean), India’s trade deficit was nearly $22 billion in 2018. Against South Korea it was $12 billion, against Australia $9.6 billion, against Japan almost $8 billion. Worst of all is the trade deficit with China – $53.6 billion. India was concerned that joining the RCEP trade pact could lead to Chinese goods flooding the Indian markets, and India’s trade deficit ballooning against most of the RCEP members. This, India argued, would have led to several sectoral producers such as those in the dairy and steel sector being dominated by foreign competition. What is trade deficit? Simply put, the trade “balance” of a country shows the… Read full this story
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