Bangladesh’s Plan to join China-Backed RCEP Worries India

December 25, 2023

GS Paper II International Relations

Context: India to reconsider its proposed Free Trade Agreement talks with Bangladesh if it moves ahead with its plan to join the China-backed RCEP (Regional Comprehensive Economic Partnership) bloc.

Bangladesh decides to join China-Backed RCEP

Both Countries agreed to start negotiations on an India-Bangladesh Comprehensive Economic Partnership Agreement (CEPA) in September 2022.
Bangladesh point of view: Bangladesh is pursuing free trade pacts to maintain preferential access to the markets of its partner countries after it gains developing country status in 2026.
- As an LDC member of the South Asia Free Trade Agreement (SAFTA), Bangladesh enjoys duty-free quota-free access for most of its items into the Indian market, which it would lose after 2026.

About Free Trade Agreements or FTAs

FTAs are treaties between two or more countries designed to reduce or eliminate certain barriers/ tariffs to trade and investment, and to facilitate stronger trade and commercial ties between participating countries.

About Comprehensive Economic Partnership Agreement or CEPA

It encompasses a wide range of economic cooperation areas which include services, investment, competition, intellectual property rights, and more, going beyond the scope of standard trade agreements or FTAs.

Why is Bangladesh joining RCEP a concern for India?

Circumventing rules of origin ( ROO): The India-Bangladesh FTA could facilitate the flow of Chinese goods into India from Bangladesh through the FTA route, burdening Indian markets and affecting Indian industries.
- India withdrew from RCEP negotiations precisely because of the concern surrounding the misuse of the ROO provisions.
- Rules of origin: It is a Rule or criteria which will be used to determine the national source of a product.

About RCEP

RCEP is a 15-member regional free trade agreement between the Association of Southeast Asian Nations and ASEAN’s free trade agreement partners (Australia, China, Japan, New Zealand and the Republic of Korea.
India withdrew from RCEP negotiations in November 2019.
RCEP is the world’s largest free trade agreement by members’ GDP.
It is estimated that through its trade liberalizing provisions RCEP could lead to income gains of over $200 billion by 2030 and add $500 billion to world trade.

Also Read: China Celebrating 10th Anniversary Of Belt And Road

News source: the hindu