Abstract
This paper explores the economic implications of the globally important Regional Comprehensive Economic Partnership (RCEP) for South Asia through case studies of post-conflict Sri Lanka and India. The results of model-based studies suggest that, as a member, India is the only country in South Asia to potentially gain, but its gains depend on the depth of the RCEP agreement. Excluded Sri Lanka, however, will likely see losses from trade diversion and erosion of preferences from the RCEP. Sri Lanka is attempting to use the recent free trade agreement (FTA) with Singapore as a stepping stone to East Asia. But both Singapore and Sri Lanka need to do more to ensure that the benefits flow to Sri Lanka. Further afield, Sri Lanka could learn useful lessons from India’s long experience of the RCEP negotiations including liberalizing goods and services trade and adopting new intellectual property rules. A renewed partnership between Indian businesses and government will help prepare for market opening under the RCEP.
Parts of this chapter draw on and update Wignaraja (2018).
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Notes
- 1.
- 2.
Please refer http://modsit.gov.lk/images/pdf/NTP_-_ENGLISH.pdf.
- 3.
The RCEP economies accounted for 32.3% of the world’s population in 2016 compared with 6.9% for the European Union (EU), 6.7% for the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP or TPP-11) and 6.5% for the North American Free Trade Agreement (NAFTA). The RCEP economies also had 32.2% of world GDP in 2016 which is a larger world share than the other groupings. See Wignaraja (forthcoming).
- 4.
However, some like the European Union (EU) attempt to keep their citizens more informed about FTA negotiations to reinforce public trust and accountability. Before launching negotiations, the European Commission (EC) conducts a comprehensive impact assessment and carries out a 3-month public consultation process. During the negotiations, the EC publishes online proposals for legal texts and progress reports after each negotiation round. At the end of the negotiations, the negotiated text is also published before full legal revision is undertaken. See https://www.oecd.org/tad/events/ec-trade-comms-statement.pdf.
- 5.
It would similar to the six years it took to conclude the ambitious TPP agreement among 12 parties, dating from the formal start of negotiations in March 2010 to signing the TPP agreement in February 2016. However, the USA withdrew from the TPP in January 2017 and the remaining 11 economies reached a partial agreement in November 2017, popularly termed the TPP-11. The WTO Doha Round began in November 2001 and has been virtually abandoned after over 15 years of talks, among 164 members.
- 6.
This section draws on and updates the discussion in Wignaraja and Hundlani (2018).
- 7.
In his Economic Policy Statement in October 2017, Prime Minister Wickremasinghe reiterated “We have obtained good results from the steps we have taken to stabilize the economy. Therefore, we should now focus on adopting an export-led economic growth strategy and policies by providing high-value and diversified products and services. A key part of this policy will be entering into free trade agreements with partner countries around the world. We are making great progress towards mutually beneficial free trade agreements with Singapore, China and India. These deals will give our economy a massive boost by opening huge new markets to our entrepreneurs” (Wickremasinghe 2017, p. 6).
- 8.
The statement reported in January 2018 stated: “The Singapore-Sri Lanka FTA is part of a broader strategy of looking East to renew our trade relationships in the process of diversifying our markets towards Asia and focus on plugging into Asian supply chains. This FTA is our first agreement with a South East Asian country—and we envisage this as a first step towards closer integration with ASEAN, and potentially be part of the RCEP—Regional Comprehensive Economic Partnership in the future” Daily News, 24 January 2018. http://www.dailynews.lk/2018/01/24/local/140786/slsfta-renew-trade-relations-asia.
- 9.
The data for trade, aid and tourists are from the UN COMTRADE Database, the Ministry of Finance Annual Report 2017 and the website of the Sri Lanka Tourism Development Authority.
- 10.
Please see Sri Lanka–Singapore Free Trade Agreement (SLSFTA).
- 11.
Please see World Bank’s Doing Business Report.
- 12.
Estimated from the UN COMTRADE Database.
- 13.
Please see Sri Lanka–Singapore Free Trade Agreement (SLSFTA).
- 14.
Based on viewpoints of Masahiro Kawai.
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Acknowledgements
The author is grateful to the Lakshman Kadirgamar Institute for International Relations and Strategic Studies (LKI), Colombo, and Overseas Development Institute (ODI), London, Pabasara Kannangara for efficient research assistance and Masahiro Kawai for viewpoints.
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Wignaraja, G. (2019). Using RCEP as a Stepping Stone to East Asia: Case Studies of Sri Lanka and India. In: Weerakoon, D., Jayasuriya, S. (eds) Managing Domestic and International Challenges and Opportunities in Post-conflict Development . South Asia Economic and Policy Studies. Springer, Singapore. https://doi.org/10.1007/978-981-13-1864-1_7
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