The Mystery of Reciprocal Demand for Regional Trade Partnership : Indian Experience in RCEP Regional Value Chains

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Pages (from-to)163-214
Journal / PublicationLaw and Development Review
Volume14
Issue number1
Online published6 Oct 2020
Publication statusPublished - 2021

Abstract

The decision of a country to join regional trade agreements (RTAs) is guided by its expected welfare gains, though potentials of both trade creation and trade diversion cannot be ruled out through such arrangements. The slow progress of the World Trade Organization negotiations has created a demand for mega-regional trade agreements in the last decade, but the recent US and Indian pullout from Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP), respectively, raised a question on their attraction. One of the major underlying objectives of RTAs is to deepen intra-bloc participation in regional value chains (RVCs) and International Production Networks (IPNs), through adoption of reformed rules of origin (ROO) provisions and mutual recognition agreements (MRA) for standard harmonization. This article, through an analysis of the RVC-IPN participation of the RCEP countries, attempts to understand to what extent the Indian pullout from RCEP can be linked to its unfulfilled expectations. The observations indicate that, relatively modest participation in the RVCs, declining domestic value added content of exports and the associated adverse trade balance scenario have critically shaped the Indian standpoint. The evolving Indian orientation towards trade remedy mechanism can be viewed in this backdrop. The analysis concludes that in the post-coronavirus disease 2019 (COVID-19) period, the Indian decision to consolidate domestic manufacturing sector needs to acknowledge the reality rather than being guided by the rhetoric.

Research Area(s)

  • Atmanirbhar Bharat Abhiyan, domestic value added in exports, India's Trade Strategy, International Production Networks, RCEP, Regional Value Chains