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India decides not to sign China-backed pan-Asian trade deal

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Via Financial Times

India will not join a long-mooted, China-backed pan-Asian trade deal because it is dissatisfied with how its reservations about the agreement were addressed, it said on Monday, even as 15 other participating nations agreed to forge ahead.

Narendra Modi, India’s prime minister, told countries at the Regional Comprehensive Economic Partnership summit in Bangkok that India would not sign off on the RCEP agreement, according to India’s foreign ministry.

The talks took place in conjunction with a summit of the Asean group of south-east Asian nations held on Monday in Bangkok. Thailand, which holds the rotating chairmanship of Asean, had hoped to wrap up the deal this week.

The proposed trading bloc, which has been under discussion since 2012, includes the 10 Asean nations as well as China, Japan, South Korea, Australia and New Zealand.

There has been considerable resistance to the agreement in India, which is dealing with a sharp economic slowdown. India, which runs large trade deficits with China, was hesitant about opening its market to a flood of Chinese goods and was demanding concessions in return. Groups including the Rashtriya Swayamsevak Sangh, the rightwing parent organisation of Mr Modi’s ruling Bharatiya Janata party, had criticised the deal.

“India conveyed its decision at the summit not to join the RCEP agreement,” said Vijay Thakur Singh, a secretary at the foreign ministry. “This reflects both our assessment of the current global situation, as well as of the fairness and balance of the agreement. India had significant issues of core interests was that it remained unresolved.”

In a joint leaders’ statement, the 15 countries said they had “concluded text-based negotiations for all 20 chapters and essentially all their market access issues”, in preparation for signing the pact in 2020.

The statement indicated that India could choose to join the trade deal later, noting that “India has significant outstanding issues, which remain unresolved” but adding that “all RCEP participating countries will work together to resolve these outstanding issues in a mutually satisfactory way”.

The trading deal, without India’s participation, is now expected to be signed next year in Vietnam, which will hold the rotating chairmanship of Asean in 2020.

If it had concluded with India’s participation, RCEP would have brought together countries accounting for about half the world’s population and a third of global output, producing the world’s biggest trading grouping.

Mr Modi had invoked Mahatma Gandhi in declining to join the agreement, said Ms Singh. “The prime minister highlighted that he was guided by the impact it would have on the lives and livelihoods of Indians, especially vulnerable sections of society.”

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