Bangladesh’s potential entry into the China-led international trade bloc, RCEP (Regional Comprehensive and Economic Partnership), has sparked unease in India.
Even as Delhi contemplates a cautious approach to the Free Trade Agreement (FTA) negotiations with Bangladesh, concerns are being raised about the possible repercussions of Dhaka’s move.
In the past few days, prominent Indian economic dailies such as “The Business Standard” and “The Hindu Business Line” have corroborated the development.
Citing sources within India’s Ministry of Commerce, Business Line reported that joining the 15-member RCEP could lead to a significant increase in India’s imports from China, impacting India as a neighbouring nation.
India is now evaluating the potential consequences before accelerating FTA negotiations with Bangladesh, as reported by Business Line.
Officials in Delhi are apprehensive that if Bangladesh becomes a part of RCEP, India might lose a portion of its existing market share in the country. Moreover, India may find itself in direct competition with Bangladesh for market access in countries covered by RCEP.
The prevailing sentiment in Delhi, according to Business Standard, is that India will deliberate on finalizing an FTA with Bangladesh after a thorough assessment of the potential outcomes in the affected regions.
The decision to join RCEP is anticipated shortly after Bangladesh’s parliamentary elections on January 7, contributing to a sense of unease in Indian policy circles. The uncertainty surrounding ongoing trade negotiations between the two countries further complicates the situation.
It is notable that Bangladesh’s Ministry of Commerce has already forwarded a recommendation to join RCEP, with Foreign Minister AK Abdul Momen indicating that a final decision will be made post the January elections.
RCEP stands out as the world’s largest Free Trade Area (FTA), encompassing the 10 Asean nations and five FTA partners, including China, Japan, South Korea, Australia, and New Zealand.
India, having been involved in the RCEP policy since its inception in 2011, withdrew in November 2019, citing unaddressed concerns. The Narendra Modi government felt that some of its concerns were not being taken into account in this coalition.
However, many observers believe that China’s eagerness to assume a leading role in the formation is a primary factor behind India’s withdrawal from the alliance.
Now that Bangladesh is actively considering joining the alliance, it has raised some eyebrows in India.
Additionally, questions are being asked about the future of the Comprehensive Economic Partnership Agreement (CEPA), which was signed between the two countries in the presence of Prime Minister Sheikh Hasina and Indian Prime Minister Narendra Modi.
Against the backdrop of Bangladesh graduating from the category of Least Developed Countries (LDCs) within three years, the urgency to secure FTAs with various nations is evident.
With discussions ongoing with at least 11 countries, Bangladesh aims to navigate the changing international trade landscape.
The prospect of Bangladesh joining RCEP looms large as a large part of the world market, including China, will be open for the country. However, there will also be the potential challenge of increased competition from Chinese products flooding the local market.
Dr Prabir De, an economist and professor at the Delhi-based think tank Research and Information System for Developing Countries (RIS), views Bangladesh’s potential RCEP entry positively.
He said: “I think it is a positive decision if Bangladesh joins the RCEP. Maybe Sri Lanka too will follow suit.”
However, the ability of nations like Bangladesh and Sri Lanka to navigate the complexities of international geopolitics remains a subject of observation, he added.