India and ASEAN countries said they would explore ways to increase trade between them despite India’s exit from the 15-nation Regional Comprehensive Economic Partnership (RCEP) agreement. The RCEP free trade agreement, which India walked out from a year ago, is expected to be signed on November 15th, between China, Australia, South Korea, Japan, and ten Association of South East Asian (ASEAN) Nations.
“As far as India is concerned, we did not join RCEP as it does not address the outstanding issues and concerns of India. However, we remain committed to deepening our trade relations with ASEAN,” said MEA Secretary (East) Riva Ganguly Das, briefing journalists about the 17th ASEAN-India virtual summit that Prime Minister Narendra Modi addressed on Thursday.
In November 2019, PM Modi had told the RCEP summit that India was walking out of the Free Trade Agreement after negotiations for more than six years, as it did not address India’s concerns about being flooded by goods from China, trade deficits and need to protect its agricultural and dairy sectors. The remainder of the RCEP countries then continued with the talks minus India, and have decided to sign the FTA, which will encompass about 30% of global trade, on Sunday. However, they are expected to leave in a clause allowing India to rejoin at a later date.
MEA officials declined to comment on whether the subject of RCEP was discussed during Thursday’s summit. However they said PM Modi had called for an “early review” of the ASEAN-India Trade in Goods Agreement (AITGA), and “underlined the importance of diversification and resilience of supply chains for post-COVID economic recovery.” Mr. Modi also announced $1 million contribution to the ASEAN COVID-19 recovery fund.
ASEAN is India’s fourth largest trading partner with about $86.9 Bn in trade between India and the ten ASEAN nations : Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. However, experts have warned that once the FTA is adopted, trade between RCEP nations will assume primacy, which could affect trade ties with other countries including India.
In his address at the summit, PM Modi also highlighted India’s “Indo-Pacific policy” as an area of convergence for ASEAN and India. According to Ms. Das, all countries stressed the importance of “a rules-based order in the region including through upholding adherence to international law, especially the UNCLOS. The leaders affirmed the importance of maintaining and promoting peace, stability, safety and security in the South China Sea in particular freedom of navigation and overflight,” she said, in reference to China’s naval aggression in the region.
“There is ample closeness between India's "Indo Pacific Oceans Initiative" and ASEAN's "Outlook on Indo Pacific",” Mr. Modi said, addressing the summit. “Speeding up all types of connectivity initiatives between India and ASEAN - physical, economic, social, digital, financial, maritime - is the top priority for us,” he added.