TheEconomistNovember 9th 2019 211S
tuff toomany sheaves of paper into a
stapler and it will struggle to fasten
them together, however thin each page
may be. The same is true of the Regional
Comprehensive Economic Partnership
(rcep), a long-delayed trade deal involving
16 Asian countries. rcepwas intended to
bind together all of the existing trade agree-
ments between the Association of South-
East Asian Nations (asean) and the re-
gion’s other big economies, including Chi-
na, Japan, South Korea, Australia, New
Zealand and India. But adding India to the
pile has caused the mechanism to jam.
At a summit this week in Bangkok, the
region’s leaders announced that 15 of the 16
participants had concluded their talks and
would be ready to sign a deal in February,
after the text was given a good “legal scrub-
bing”. But India was not yet ready to join
them. “Neither the talisman of Gandhiji
nor my own conscience permit me to join,”said Narendra Modi, India’s prime minis-
ter, invoking Mohandas Gandhi (pictured),
who preached self-reliance and relished
the frugality it requires.
Although India and China have free-
trade pacts with asean, they do not have an
agreement with one another. Many in India
fear that lowering tariffs on Chinese goods
will only increase its yawning trade deficit
with the country (see chart on next page).
They also worry that India’s poor farmers
will be flooded out of the market by Austra-
lian grains and milk from New Zealand.
These concerns seem overblown. The
agreement (which has not yet been pub-
lished) is unlikely to have liberalised agri-
culture much, if at all. And it reportedly al-
lows its poorer members to proceed
cautiously and gradually in lowering tariffs
on manufactured goods. Indian and Chi-
nese officials had been discussing adjust-
ment periods of up to 25 years for someitems. To assuage Indian concerns, its ne-
gotiating partners were also apparently
willing to let it impose some sort of “safe-
guard” tariffs if imports surged too sharply.
None of that was enough to overcome
vitriolic domestic opposition to the deal.
Trade negotiations tend to click only when
the fear of foreign competition is offset by
the temptations of foreign markets. For In-
dia, however, the temptations and fears are
wildly mismatched. It is eager to open up
new markets for its competitive itfirms.
But services such as ittend to be neglected
by traditional trade deals. Only ambitious,
forward-looking agreements venture
deeply into these areas, and those deals
usually entail a degree of openness to for-
eign manufacturers that would terrify In-
dia’s industrialists. Thus India typically
falls between two stools, approaching
trade in industrial and agricultural goods
like a poor country and trade in services
like a rich one.
Even without India, rcepencompasses
almost 30% of the world economy and the
same proportion of its population. Its
members also span every level of develop-
ment. The income per person of its most
prosperous member (Singapore) is 50
times higher than its poorest (Myanmar).
As well as the traditional focus on cutting
tariffs on goods, it includes some helpfulTrade dealsHaunted by Gandhi
HONG KONG
Asia’s trade negotiators decide they can no longer wait for a protectionist IndiaAsia
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23 CyclerickshawsinBangladesh
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24 Over-reactingtoFukushima25 Banyan:PoliticsinthePacificAlso in this section24 China courts Taiwanese businesses