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Will the World Head Toward Multilateralism?

Will the World Head Toward Multilateralism?

Al-Etihad, UAE, November 21

In the past few days, China and 14 other countries – Australia, Brunei, Cambodia, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand and Vietnam – signed an accord creating the largest free-trade bloc in the world. It is known as the Regional Comprehensive Economic Partnership Agreement. A third of the world’s economic activity takes place in the countries that have joined the bloc. The signing ceremony took place on the sidelines of the annual summit of the Association of Southeast Asian Nations (ASEAN), which includes 10 countries. India was a notable exception to signing the agreement after expressing a series of concerns over the bloc. When negotiations over the agreement began in 2012, India was still involved. But New Delhi’s doubts and fears only strengthened after the spread of the coronavirus pandemic and the resulting obstacles to global supply chains due to countries imposing various closures and restrictions on their markets. While signatory countries hoped India would ultimately join, Prime Minister Narendra Modi claimed that his conscience would not allow it. The decision to leave the negotiations was reached at the highest levels of power in India for fear of opening the Indian market to Asian trading powers. However, several other factors contributed to the decision. Among them was the trade deficit facing India. Twelve of the 15 signatories of the agreement refused to conduct research into the service sector, which includes the flow of workers and professionals throughout their territories. There were also concerns about country-of-origin rules and non-tariff barriers. There was strong opposition from Indian trade groups and local companies in certain spheres, such as the dairy sector, which feared damage from the entry of foreign dairy manufacturers into the Indian market. But the main reason was India’s fear of opening its markets to countries with which it has had a strong asymmetrical trade relationship. Indian industry feared that the tariff cut would cause Asian goods to flood Indian markets and exacerbate the country’s trade deficit. Modi has long emphasized India’s policy of being self-reliant. Despite this, India and the ASEAN countries agreed to search for ways to boost trade and pave a path for India to join the bloc. Can India distance itself if the world moves toward multilateralism with the change of power taking place in the United States? Perhaps US President-elect Joe Biden can restore the Trans-Pacific Partnership, the proposed trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States, which was canceled under President Donald Trump. If this is the case, India could find itself left out of both trade blocs. If multilateralism becomes the dominant global trend, India may at some point find itself reconsidering its position on the Regional Comprehensive Economic Partnership Agreement or any other large trading bloc agreement. Gulf states, too, will need to rethink their position and make sure they aren’t left out. – Zikru Al-Rahman (translated by Asaf Zilberfarb)

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