How India has managed toweave ‘RCEP minus China', Pg10

Key Highlights:

• With the conclusion of the India-New Zealand Free Trade Agreement (FTA) negotiations on December 22, India has effectively secured trade deals with 14 out of the 15 RCEP member countries.
• India famously opted out of the Regional Comprehensive Economic Partnership (RCEP) in November 2019. The primary concern was the potential for Chinese goods to flood the Indian market under a multilateral tariff-free regime.
• By signing bilateral FTAs with almost all RCEP members except China, India has gained market access to the Indo-Pacific region without surrendering its ability to control tariffs on Chinese imports.

Detailed Insights:

• The decision to stay out of RCEP was largely a measure of "smart risk management." Chinese manufacturing competitiveness posed a systemic threat to India's domestic industry. A bilateral approach allows India to exclude sensitive sectors (like dairy and small-scale manufacturing) which would have been difficult to protect in a 15-nation multilateral deal.
• Joining RCEP would have potentially allowed Chinese products to be routed through other member countries (like those in ASEAN) with minimal processing, taking advantage of the bloc's unified rules. Bilateral deals allow for stricter Rules of Origin to be enforced.
• Currently, India’s trade relationship with China is governed by the Asia Pacific Trade Agreement (APTA). Unlike a full FTA which aims for zero tariffs on most goods, APTA is a preferential pact that offers lower duties on only a limited selection of items, keeping India’s trade defenses intact.
• This strategy reflects the government’s shift toward "Reciprocal Trade," ensuring that Indian exporters get meaningful access in exchange for opening domestic markets, while maintaining safeguards against non-market economies.

Key Concepts Involved:

• RCEP (Regional Comprehensive Economic Partnership): A mega-trade bloc comprising the 10 ASEAN nations plus Australia, China, Japan, South Korea, and New Zealand. 
• APTA (Asia Pacific Trade Agreement): A preferential trade pact among several Asian nations (including India and China) that provides tariff concessions on a "positive list" of specific products.
• Rules of Origin: The criteria used to determine the national source of a product. These rules are vital in FTAs to ensure that only goods truly produced in a partner country get tariff benefits, preventing "trade deflection."