 Welcome to NewsClick. The world's largest FTA has just been signed called the RCEP, the Regional Comprehensive Economic Partnership. It includes 15 countries in Asia Pacific, which is a 10-country ASEAN bloc, plus China, Australia, New Zealand, Japan, and South Korea. It's been under negotiation for eight years. It encompasses 30% of global GDP and nearly a third of global population. In an arduous eight years of negotiations, in fact, exactly a year ago, India pulled out of the RCEP, citing that the deal was loaded against it. So to unpack the deal within current geopolitics of global trade, and also to discuss its implications on India, we have two panelists with us, Professor Biswajit Dar, an economics professor at the Jawaharlal Nehru University in New Delhi, who specializes in trade and investment policy, and Pravir Purghasta, the chief editor at NewsClick. So if I may start with you, Dr. Dar, the RCEP is being sold as a free trade agreement that will help member countries in the economic recovery during the pandemic. So what are your initial thoughts on an FTA being signed in the middle of a pandemic, especially when the WHO says that it will take at least a few years to get the pandemic under control? The World Bank estimates that the global economy will take at least up to five years to recover? Yeah, actually, these countries, I think, are banking on the fact that recovery might come earlier than has been predicted earlier, because the world economic outlook of the IMF in its October edition has said that the downturn is not as sharp as they had predicted in June, and that the recovery will come sooner than later. The other news that came very recently was that Japan was doing particularly well, and the economy is looking up. And of course, there is China. So we all know that China has a significant influence in this region, and also on several of the RCEP members. But overall, if you look at it in terms of pure economics, I think the intention of all these countries, and most of these countries, except China, even China, I would say, are export-oriented. And so a large part of their demand actually comes from international markets. So they have the export demand is a major driver for these economies. And therefore, these countries would, I think they have expressed the desire to use the international market to get out of the crisis as soon as possible. So I think it's a very different mindset that is working. I think they are also trying to convey to the world that that recovery is around the corner. And therefore, we have the deal. So I think we need to disconnect RCEP from the larger narrative that we are seeing. There is a specific narrative that is happening in this region, and also context of several economies of this region, and one needs to read it in that context. We'll get to the China angle that you've just mentioned, but I wanted to get a sense from Rabir sort of situating RCEP within global sort of trade dynamics. The RCEP is being signed when the WTO is struggling to maintain relevance as an important actor in global trade. It's former DG Azevedo resigned abruptly in the middle of the pandemic in May 2020. The WTO seems to have found a successor in the Nigerian diplomat Dr. Angosi, but the US is blocking her sort of appointment. The appellate body has also been installed by the US. So I mean, Rabir, if you can give us a sense of how do you read RCEP within the crisis of multilateralism and the uncertain future of the WTO? Let me add a small point with respect to the pandemic issue that you had raised. If we look at the Southeast Asia, Japan, and what would be the East Asia as well as China, then you would find that the impact of COVID-19 has been relatively less, that they have been better able to maintain themselves under the COVID-19 epidemic scenario than most other regions of the world, particularly countries like India and the United States, which have really had a very bad outcome and is still continuing to see very large numbers of infections. So in that sense, trade revival for Southeast Asia, East Asia as well as Australia, New Zealand actually is more likely to take place now. But then the COVID-19 is relatively, relatively less threatening to their economies than the rest of the world. So I think it makes sense for them also to talk about trade revival at this particular juncture. The second question that you have raised effectively, the World Trade Organization has been made defunct with the United States acting the way it has done. And the two reasons why they have done that, they thought that they have taken the maximum benefit they could take out of WTO. And now they're better served by make America great again, Trumpian slogans, but also unilateral action, that they have enough muscle power, economic power, political power to not have to adhere to any rules, but force every country that it trades with to balance its trade with the United States, which is the slogan that Trump was giving with respect to China, with respect to India, various other countries. So given that the fact that other countries today are looking at non-WTO options, I think also makes sense if trade is a driver of the economies. And for a lot of the countries, and you point that out with respect to the ASEAN countries, also South Korea, countries, South Korea, China as well, that global trade has been a driver internally, though as it stands, China is looking perhaps more at internal development now, given the kind of quote-unquote deep coupling the United States was trying to do. The question that remains is, will the Biden administration return to a more international stance on WTO and other with its stop playing the spoiler it has done for the last four years and even earlier, whether the decoupling policies with China will continue or it is going to take, it's going to make a return to the policies that existed earlier. I think the jury is out on that one, but my sense is the Trumpian politics is here to stay, but even if Biden wants to change the policies of the United States, it's not going to be that simple. So given this, I do believe that if countries are looking for trade as something that will ride their economies, then regional trade agreements is perhaps the way forward. Unfortunately for India, we are out of our set, South Asia is not exactly conducive to us, so we don't have a similar scenario in South Asia to drive a larger trade agreement or trade relationship with Pakistan, with Sri Lanka, with Burma, with of course China as well. So that kind of relationship which could take place in South Asia, relationship with West Asia does not seem to be in the offing, neither is the international scenario very conducive for it. So we seem to be in that sense the odd man out in terms of trade, but we can come back to this issue later. The basic issue is our set for the regional countries shows two things. One is they do believe that trade is something that they need to expand A and B, they do not believe decoupling with China is an alternative. And it's important to see South Korea and Japan who are Australia, New Zealand are not even counting, who are all firm allies of the United States are all willing to join the our set. So that is an indication that decoupling is not going to be that easy. And if that is so, then of course to isolate China, isolate companies like Huawei from the international market may not be that easy for the United States. Thanks for being, I mean, let's take this issue about that the ASEAN block is an export oriented block and try and unpack that a bit further. So I mean, Dr. Dharan, if you look at the content of the asset and its membership, it's a diverse membership, which is a mix of, you know, developed economies, middle income developing economies, and you have LDCs as well. And I know the text of the asset has just been released on Sunday. It's 20 chapters, it's around 500 plus pages. And then you have the annexed yours as well. And the point that Praveel made about, you know, this talk about decoupling from China doesn't really hold much water in the region. China is very much at the center of this. But from your, you know, earlier assessment of the asset and its possible content, maybe you've already had a look at the text of the agreement, who's going to gain and who's going to lose from the agreement among those 15 countries and what's the China sort of angle on that. And just to refer to you, I was sort of listening to a presentation from an economist at UNPAD. And UNPAD has done some smart modeling as opposed to the CG modeling. And in that they seem to clearly attest to most of the ASEAN countries not getting much export access, in fact, imports increasing. So trade balances are going to be negative for Cambodia, Philippines. In a nutshell, the UNPAD argument being that ASEAN is not going to gain much from the asset. So just wanted your views on that, on the content of the agreement itself that was signed on Sunday. Yeah, I think, you know, the first thing that one needs to understand is that this is really the most extensive free trade agreement that we have seen thus far. It takes up a lot of the elements that are there in the previous FDAs that the United States has done. But most importantly, in terms of tariff liberalization, it really goes very far. I was doing some back of the envelope calculations on what China has offered ASEAN in terms of tariff liberalization. China's average tariffs as of now is close to 10%. And within the next five years, they have committed to bring down the tariffs to 2%. And in terms of the total number of tariff lines, which will be free from all tariffs, that means there is the fact of tariff elimination, it's more than 93, 94%. And I expect that similar thing would happen in case of other countries as well. For instance, Japan has promised tariff elimination of the extent of 91% of the tariff lines. So this is the fact that some people feel that RCEP hasn't gone as far as TPP has, but the TPP had proposed. But I think you can see a very close mirroring of what TPP or CPTPP looks like today in RCEP. So there is very little difference there. Now, on no point about who's going to be benefiting from this, it's really China who stands to benefit in every way, especially because they would get the first move advantage. Right now, despite the economies, as I mentioned earlier, that they would recover faster than we thought they would a few months back, but China never faced the kind of slump that other economies did. So China is motoring along very well. And so China is just waiting for these economies to really start, the revival of these economies to take place. And they're there to exploit these markets. And if you again look at the way China has diversified beyond trade in goods and their presence in trade in services, and especially financial services, it's quite amazing because of the the four largest banks today are Chinese banks. And of the top 20 banks, the Chinese banks have a significant presence there. So in terms of the the financial sector, China will be right up there. We know the strength in telecommunications and other service sectors. But I just wanted to flag this issue on financial services. Then of course, China has really deep pockets as far as investing in other countries are concerned. So and I do think that China is going to exploit the market opening to the to the full extent. And also, the whole point is what Praveer was trying to convey earlier, this whole decoupling thesis that China will be suffering from isolation. But that narrative is pretty much gone because these countries have the major economies in this region have clearly shown that they may have political differences with China. And they do have political differences with China. So in our Indo-Pacific, we have this squad, which is now sort of very active. But two of the members of the quad are part of the RCEP. So this is something that these countries have been doing over a period of time that they've kept their economic agenda completely firewall from the political differences. I'd like to come in here. The issue that you raised earlier, that China would benefit. Now, China's economy is moving as you said in a slightly different direction as of now. They are deepening their sectors and they also are building a strong financial sector. Let's come to the issue of exploiting the market. They are also opening their market to Asia, ASEAN goods. And therefore, presumably, because they're moving away from certain sectors, which are more labor intensive into more high-tech sectors, it's possible that ASEAN will also get a section of that part of the Chinese market. And therefore, it would be in that sense will win. Who wins more is a different issue. Obviously, the bigger economies do benefit more than the smaller economies. That's true. But nevertheless, there is some benefit to the ASEAN also finding a market immediately. The Chinese market is going to be a much bigger one than anything they can get abroad, except perhaps Indian market. So that is one. And secondly, when we talk about the financial sector, it's also clear the financial sector, the competition is really with the U.S., European Union and China in the Southeast Asian market. Because strong indigenous players in that market are yet to have the cloud that, for instance, the foreign players have. So in that sense, what you're seeing is the Chinese for the first time are emerging as strong financial players. But as of day, the financial levers of the world are still controlled by the United States. So in that sense, an autonomous financial market rising as ASEAN could perhaps offset some of the American Cloud. I agree with you. This is the point that I'm trying to make, that in the discussion that we have about China, China is still seen as the factory of the world. And the Chinese have been very sort of, I think they have also been trying to, if I use a controversial term, mislead the world, saying that they are going to be focusing on the manufacturing sector for the next decade, at least. And then they would start looking at the services sector. But what, of course, the world did not take cognizance of is that while China was actually carrying out this whole narrative about expanding into the services sector, they're already there. And the services sectors that matter most, they're right up there. So I just wanted to bring that in. On your point about ASEAN getting advantage from China, that certainly will be there because China will keep on shedding those sectors or those areas which are more labor intensive. But of course, we can't say for sure because there is also a considerable change taking place in the process of production because the kind of inroads AI is making and the kind of labor displacement that we're going to be seeing over the coming decade at least. We'll make some of the earlier calculations about China shedding those sectors which are labor intensive a little less relevant here. So I think we'll have to keep our options open in terms of thinking about the sectors because as of that AI, how much it will replace human beings in terms of say, tech stands, not a very clear indicator don't really exist at this stage. No true possibilities, potential, but we don't really know. No true, but some of the sectors where China was having problem with labor, for instance, the automobile sector was one of the sectors right up there. There we know the kind of robotization that has taken place right across the world. Automation has taken place, for instance, most effectively in, for instance, electronic board manufacture. Okay, electronics is where the most automation has taken place, tech stands relatively less. That's what I'm saying. There is a continuum in which one end and you have the other end. There's a whole range of things in between. No, I'm clear at the moment how much automation will really change the landscape completely. No, I was trying to link this up with the whole the value chains. As we know that the value chains have actually proliferated most in case of electronics and automobiles. And in automobiles, there have been this whole discussion that, since China is becoming more sort of the wage component is going up and there have been a lot of labor unrest because they've been trying to keep the wages low. There would be tendencies on the part of these big companies, even Chinese companies, to move out of China and relocate and there was a lot of wishful thinking here as well that some of the foreign companies, non-Chinese companies will come to India. Now, what I'm trying to say is that in terms of value chains where China is at the center of these value chains, the driver of the value chains, that means, in fact, get strengthened if AI comes in. It's not going to be... I get what you're saying. I'm saying, just keep an open mind. Since I deal with that sector directly, just keep an open mind at the pace at which it will take place and the pace of trade integration may be different at this point. That's all. Yeah, I agree with you. I agree with you. You're disagreeing with you. I'm just giving you a comment that this has kept open and I think we need to give it back to control, back to Benji. Now, link to the point that Praveen is making about technology, if you look at the asset chapters, it does not have enforceable digital trade rules. It doesn't have a chapter on state-owned enterprises. It doesn't have a government procurement chapter. It doesn't include the controversial ISDS. So it is, in that sense, China playing a role in trying to articulate possibly and other countries as well that were resisting the TPP. So the TPP and the asset have some divergences and I wanted your thoughts on how, therefore, the TPP dynamics, which includes 11 countries now, it was March 2018, it's been ratified by several countries. Now, there is some speculation on Biden possibly rejoining TPP that remains to be seen when he assumes presidency at all smoothly in January 2021. So I just wanted your views on the TPP sort of asset dynamics and also in terms of how some of these areas that you just previously kind of discussed figure in the trade agreement. Maybe we can have Praveen go first and then Mr. Jeet can supplement. I'm going to leave the implications of the leaving out certain sectors on Mr. Jeet who is the expert on these issues. As you know, I'm not on the question of U.S. rejoining the TPP and the TPP versus asset dynamics. If the U.S. doesn't join the CP TPP or whatever it's now being called, we used to call it the TPP in my olden days. Now, question is that that is there, that is not an agreement which is any driver in it. So clearly if the U.S. returns that TPP will have a driver and you might see a competition in some sense, but a lot of the countries who are a part of the TPP are now a part of the asset and is Japan, South Korea. It's not only the underdeveloped countries, South Korea and Japan, China, all three are there as developed economies. So given that, I think that the TPP at the moment is not going to pick up speed, particularly as the U.S. politics are going to remain in the doldrums of quite some time. Trump may leave, but Trumpism is going to be alive and the U.S. to take an external view of the world and view of the kind of challenges Trumpism has raised in the United States is unlikely to go very far. So I think at the moment, as an external economic player, the U.S. clout is going to weaken at the moment and you are likely to see China being more active in this space. That would be my take on it, but you know, Vishyajit may have a better view of this because he follows trains much more closely than I do. Yes, I pretty much agree with you because I think you mentioned this earlier in your opening remarks that the Trump cornerstones make America great again and make America first. I don't think Biden will be able to shrug them off very easily. And considering that Trump has such a huge following at the second largest votes ever cast in a presidential election. And also, if the Congress was looking significantly different from when it was earlier, then one could have expected the Democrats to have a little more say in policymaking. So I don't think that is going to change because I think the economic nationalism in the U.S. is going to continue. And that would that means that they would become more that would remain inward looking, perhaps not as aggressive as their intent as the Trump was very, you know, sort of making a demonstration of his aggressiveness. So the U.S. is going to quietly do this. You know, their diplomacy and then they're going to get after China. There is no doubt about it. And U.S. expansion in this region, I don't think the Obama administration moves are going to come back any time soon. So I entirely agree with you on this. Now, again, coming back to RCEP, I think it is, you know, RCEP has a lot of these elements that you mentioned were not there. Electronic commerce is very much a chapter there. There is a chapter on government procurement. And there is a chapter on small and medium enterprises. Now, what I see in this is they are actually trying to do two things. One is that they are doing some non-setting here in these three areas, which are very, very significant. Electronic commerce, non-setting can actually define how WTO is going to be handling this issue. We know it for a fact that a lot of the RCEP members were very aggressive on getting electronic commerce included as a WTO discipline. And the other two areas that I talked about, government procurement is, of course, an optional agreement at this point. And there have been strong pressures to make it what I would say a compulsory kind of an agreement in the WTO. And small and medium enterprises. One doesn't know which way this is going to go, which way it is going to go. But that is very much a part of the bigger template that we are seeing in the WTO in setting the reform agenda of the WTO. Because you know that the European Union and the Ottawa Group, which is European Union is also part of that, you know, Canada took that initiative. There have been among the major players who have been talking about reform of the WTO. So many of the issues that we were talking about earlier, the developing countries, the Doha agenda, rebalancing the WTO and making it more development oriented. That is all going to be history. Because in any case, Doha around is virtually dead. And so our step, I think, is a very significant step towards redefining norm setting as far as global trade is concerned. But TPP was supposed to do that. So all of us were very keenly watching the progress in TPP going fully well. If these countries, 12 countries come together and do these kinds of norm setting, then they're going to be having a huge leverage in the multilateral space. Now, similar thing is happening here. And so I think RCEP significance goes far beyond the regional consolidation that it will end up doing within the East Asian region. And I'm really quite confident that RCEP will have global ramifications. Thanks for those clarifications, Dr. Dhar. I mean, finally, just to conclude, Dr. Dhar, your thoughts about what this means for India to be left out of two big trading blocks, both the RCEP and the TPP. The RCEP declaration also allows India to rejoin immediately if so it wishes. So I mean, the rhetoric that you see in the papers is that India is going to be isolated from the next round of globalization. So you're concluding thoughts on what it means for India's trade strategy going forward. Yeah, I think India is now the government of India has now decided to adopt a set of policies which are completely inconsistent with any further engagements in these agreements. I don't see how the Atman-Irbar Abiyan and the liberalization that RCEP or any other of these bilateral agreements are talking about, they can sit together. And as far as India's future is concerned, I think either way, we would have had significant trouble because from what we have seen from the implementation of the three FTAs with the East Asian countries that we have, Asia and Japan and Korea, India has lost out big time. Now, and with the commitments under RCEP and the commitments under RCEP had to be very deep. So like 90% plus elimination of tariffs, which would have opened up agriculture sector as well. And that would have been very difficult for India to accept. So I think that if the business as usual continues for India, which is that we are not focusing on really turning around our real sectors, agriculture and industry, we are not trying to make these sectors sort of efficient and dynamic. We are not building this into the processes. I do not think India can participate in any of these agreements with any degree of hope that it is going to be benefiting from these agreements. So I am someone who actually sits between the two extremities because there is one set of people who say, we should have joined RCEP and there will other set of people who always say that we should not actually liberalize. I have always been maintaining that we should be looking at the global processes, but after strengthening our own putting our own house in order and strengthening our own industries. But that has not happened. When this will be happening, we don't know. And till such time it happens, I think political compulsions will keep India out of all these trade arrangements. I just add to this saying by bringing out that if we believe that isolation is going to help us, it won't because unfortunately in today's world, technology and goods are required for even developing your own sectors in the way you want. So having barriers, making it more expensive is one issue. It's not going to, in the 50s, 60s you could do that because the amount of complexity in technology is relatively less. So was the specialization in technology relatively less, not so today. So therefore being out of global trade, not being out but having a larger cost to go with global trade, which may happen without strengthening the way we should be talking is one element. The other element of it is that you are allowing free flow of capital. On that there seems to be no bar and therefore you are really combining two very dissimilar things. We are also making us open to digital monopolies of all kinds. We have allowed Facebook and Google to invest huge amounts in Geo, which is today the telecom monopoly. So we are seeing what we should have just said, these jointed policies and no vision and I think that is with the bigger problem rather than should we or should we not join our set. Thank you Praveer and Professor Dar for sharing your insights. The RCEP has just been signed. It will take some time for the ratification process, maybe up to two years, but given the twin challenges of the pandemic, the economic recovery, how India plays out its own strategies and you underline the importance of domestic industrial and digitization strategies for that. It remains to be seen how all of this will pan out. So thank you everyone for tuning in to NewsClick and continue to support independent media. Thank you.