India's Commerce and Industry Minister, Piyush Goyal, asserted on Thursday that the nation's decision in 2019 to withdraw from the Regional Comprehensive Economic Partnership (RCEP) negotiations was a critical move that shielded its domestic manufacturing sector from collapse. Speaking at the ISID-IDRA Fourth National Conference on India's Industrial Transformation in New Delhi, Goyal claimed that joining the RCEP would have been the "death-knell" for Indian industry, leading to an influx of cheap Chinese goods.
Goyal questioned the rationale behind the previous Congress-led government's initial agreement to participate in the RCEP trade talks. He highlighted that India already possessed free trade agreements (FTAs) with key economies like ASEAN, Japan, and South Korea, and was actively negotiating one with Australia. Trade with New Zealand, he noted, was minimal at the time.
Concerns Over Chinese Imports
"Bacha kaun (who was left)? One country, China," Goyal stated, emphasizing that China was the only major economy without an existing FTA with India among the RCEP participants. He expressed his perplexity regarding the compulsion to join negotiations that would have opened India's vast market to Chinese competition without adequate tariff protections.
Recalling his experience upon assuming the role of commerce minister on June 1, 2019, Goyal described reviewing the RCEP negotiating documents as a distressing process. "We were mortgaging India's future through RCEP," he claimed, detailing how shocking revelations emerged from the files, leading to his strong objections.
A 'Cat and Mouse' Game and a Bold Decision
Goyal recounted a persistent struggle within the government, describing it as a "game of cat and mouse" where officials remained committed to joining RCEP despite his repeated warnings to Prime Minister Narendra Modi. He praised PM Modi for ultimately making the "bold decision" to opt out, standing firm against international pressure after years of negotiation.
The minister underscored the political resolve required for such a move, particularly when facing global scrutiny. "That one single act on 4th of November 2019 in Bangkok is the reason that today we are discussing manufacturing and India's industry. Otherwise we would have been a nation of salesmen and sales girls marketing Chinese goods in India," Goyal concluded.
What is RCEP?
The Regional Comprehensive Economic Partnership (RCEP) is a free trade agreement involving 15 Asia-Pacific economies, including China, Japan, South Korea, Australia, New Zealand, and the 10 ASEAN member states. India participated in the negotiations but ultimately decided not to join on November 4, 2019, citing concerns over potential trade deficits, unfair imports, market access, and adverse impacts on farmers, MSMEs, and domestic manufacturers.