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Border Skirmish With China Hurts RCEP's Plan to Induct India 'Unconditionally' into Free Trade Bloc

© AP Photo / Andy WongAn Indian national flag is flown next to the Chinese national emblem. (File)
An Indian national flag is flown next to the Chinese national emblem. (File) - Sputnik International
New Delhi (Sputnik): In November 2019, Indian Prime Minister Narendra Modi withdrew from a China-led 16-nation free trade bloc, the Regional Comprehensive Economic Partnership, blaming Beijing’s uncompromising attitude on market access. After the withdrawal, India initiated trade talks with the US that are yet to come to fruition.

The India-China border clash in Ladakh's Galwan Valley last week seems to have have impacted plans by the Regional Comprehensive Economic Partnership (RCEP) free trade group to include India unconditionally in the trading bloc.

Almost five months after Indian Prime Minister Narendra Modi decided that India will not be part of the China-led group, the secretariat of RCEP offered India the chance to join the bloc without any conditions in April this year. India has been examining the offer, according to sources close to the developments.

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However, the scenario has completely changed following the ongoing India-China standoff at the Line of Actual Control in Galwan, which has seen 20 Indian soldiers killed in violent clashes with Chinese troops. The number of casualties on the Chinese side has yet to be announced.

Sources in the Indian Commerce Ministry reveal the country was earlier considering the offer to join the bloc. However, they say that after the Galwan incident India has shelved the proposal.

“After their meeting in April this year, the RCEP secretariat sent a proposal to India to join the trade bloc unconditionally. India was examining the matter. However, in the wake of the developments at the border, India for now will not consider rejoining the bloc even unconditionally,” a top source in the Indian Ministry of Commerce told Sputnik.

At the time of negotiations last year, India’s concerns were mainly on safeguarding the Indian dairy and farm sector, and watching out for import surges from China, which could impact on Indian industries. However, since the concerns were not addressed, India opted out of the bloc.

The China-led RCEP involves 15 nations and is aimed at controlling almost 40 percent of global trade valued at $21 trillion.

The free trade bloc would have represented 30 percent of global Gross Domestic Product. After India left the group in November last year, the bloc now comprises 10 members of the Association of South East Asian Nations (ASEAN) plus China, New Zealand, Japan, Australia and South Korea. India withdrew from the deal on claims that China was not granting market access, and that New Delhi did not stand to gain much from membership.

Last November, while withdrawing from the bloc, Indian Prime Minister Narendra Modi said: “The RCEP does not address satisfactorily India's outstanding issues and concerns. In such as a situation, it is not possible for India to join the RCEP Agreement.”

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“Standing for greater regional integration, India has been pro-actively and constructively engaged in the RCEP negotiations since its inception. But during the last seven years, many things, including the global economic and trade scenarios, have changed," he added.

For the past few months, there has been a growing concern in the Indian government that the $85 billion bilateral trade between India and China is heavily lopsided in favour of China.

According to Commerce Ministry data, Indian imports from China were valued at $70.31 billion in 208-19 and exports to China from India were at $16.75 billion, leaving a wide trade deficit of $53.56 billion. India’ trade deficit with China has remained upwards of $50 billion since 2016.

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