Dost Muhammad Barrech
INKING of a historic deal among ten Association of Southeast Asian Nations ASEAN states including China, Japan, South Korea, Australia and New Zealand to form a Regional Comprehensive Economic Partnership RCEP on 15 November 2020 in Hanoi to create the world’s largest free-trade bloc in terms of Gross Domestic Product GDP is likely to be ushering the path to regional integration and reinforcement of economic growth of the region. The participation of the aforementioned countries in RCEP demonstrates that the prevailing century belongs to the Asia-Pacific region. RCEP accounts for the world’s 30% GDP including one-third of the global productive population. Engrossingly, RCEP outstrips the European Union (EU) and United States-Mexico-Canada Agreement (USMCA) in terms of GDP and the economic bloc has approximately US$ 26.2 trillion GDP. However, pulling India out of RCEP by Indian Prime Minister Narendra Modi on November 3, 2019, raises many questions over his exclusive approach that negates regional integration, win-win situation and canon of globalization. Castigating China by Modi as the leading and crucial player in RCEP for flooding its imports in Indian markets jeopardizing millions of jobs and local industries sounds irrational in the era of globalization.
To bear in mind, in RCEP there is not only China rather there are ten members of (ASEAN) nations including Australia, Japan, South Korea and New Zealand having robust economies. India can also forge better economic ties with other RECP members. Trade, arguably, is two-way traffic, blaming others for flooding their overwhelming imports to India shows its own fiasco. On account of the Indian mindset of a one-way trading system has already made the South Asian Free Trade Agreement (SAFTA) unsuccessful. The former Indian External Affairs Minister Yaswant Sinha maintains that (SAFTA) is dysfunctional “because of India’s mindset of a one-way trading system”. Modi cannot overlook consumers and producers of RCEP members. New Delhi ought to jump at the opportunity to exploit the middle-class population of 2.023 billion in the Asia Pacific region. India, currently, has a 200 million middle-class population that is expected to be reaching to merely475 million by 2030. By 2030 India’s 475 million middle-class population will be equivalent to what China is in 2020.An unprecedented middle-class of China with Gross Domestic Product per capita $ 8254.30in 2019 that is forecasted to reach $25,307 in 2025 will be a huge consumer market for Indian items that by all means will prove extremely useful for the Indian economic growth.
Both Australia and Japan are part of the Quad or the Quadrilateral Security Dialogue have recently also participated in the Malabar exercise in the Bay of Bengal and the Arabian Sea in the Indian Ocean. To be fair, Quad and the Malabar exercises are designed to counter China’s growing influence in the region. Nevertheless, Australia and Japan prefer RCEP over Quad and Malabar exercises; they are fully cognizant of the fact that the future belongs to the Asia-Pacific region. New Delhi’s obsession with the containment of China be eschewed and should concentrate on emerging economic opportunities in the region in the shape of RCEP. Walking India out of RCEP also makes its “Act East Policy” dubious that aimed at promoting economic integration with ASEAN members and the Asia Pacific region. An exclusive approach of Modi puts ASEAN states in a quandary, giving a clear message to the region that India is an unfriendly country for Foreign Direct Investment (FDI). In this regard, Malaysian Prime Minister Muhyiddin Yassin, argues, “If the Covid-19 pandemic has taught us a lesson, it is that ASEAN must be self-reliant in the face of unprecedented crisis, be it for now, or future.” He further reiterates that “We must show that we are masters of our region’s destiny and that we can work together to achieve shared aspirations and solve common problems,” The question remains: Is India willing to be the master of the region’s destiny? Apparently, she does not seem to be the master of the region’s destiny instead of giving space to China and other regional countries to bolster their economic ties.
India with a contracting rate of -23.9% amid Covid-19 becomes the fastest and largest contracting economy in the world. Its GDP has been shrinking by leaps and bounds; the GDP growth rate of the country in March 2018 remained 8.2% that in August 2020 had declined sharply to 3.1%. The country’s two-thirds of people inhabit in poverty and 68.8% of the population lives on less than $2 a day. In such delicate circumstances, not joining RCEP would further intensify Indian economic woes. Modi often claims that he will make an economy worth of India US$5 trillion by 2024. Ostensibly, it is a Herculean task to make US$5 trillion by 2024 by espousing an exclusive approach and protectionism. As the saying goes that “nothing ventured, nothing gained”. Without taking a risk, gaining competitive capacity will remain merely wishful thinking. India ought to avoid slowing China’s rise and should ponder over in consolidation of its economic growth, poverty alleviation, improving the living standard of the poor masses, making technological advancements which are only possible through an inclusive approach, regional integration, winning the confidence of foreign investors and avoiding protectionism.
— The writer works at the Institute of Strategic Studies, a think-tank based in Islamabad.