What India’s Withdrawal from RCEP Means for ASEAN, India and the Indo-Pacific Concept

The 35th ASEAN Summit and Related Summits in Nonthaburi, Thailand, took a surprising turn when Prime Minister Narendra Modi pulled India out of the Regional Comprehensive Economic Partnership (RCEP) negotiations on 4 November 2019. In his statement announcing the withdrawal, Prime Minister Modi explained that the “present form of the RCEP agreement does not fully reflect the basic spirit and the agreed guiding principles of RCEP as it also does not address satisfactorily India’s outstanding issues and concerns.”
India’s decision to prioritise domestic economic interests over the regional economic integration project is not unexpected. Nevertheless, this decision will be read differently in the capitals of the ASEAN member states. For starters, ASEAN views the economic and strategic imperatives of the trade agreement as two sides of the same coin. Integrating India into the region’s economy serves to embed India deeper into the region’s political and strategic spheres. ASEAN looks to India as an indispensable fulcrum in maintaining the region’s precarious strategic balance by serving as a counterweight to aspiring powers with hegemonic ambitions. Former Singapore Prime Minister Mr Goh Chok Tong once described ASEAN as an airliner with two wings – China and India – on each side. In this respect, ASEAN will view India’s RCEP withdrawal as a lost opportunity to strengthen India’s strategic engagement with the region.

In the same vein, India diminished its own strategic weight as its relevance and commitment to the region is called into question, least of all its Act East policy. Does India have the resilience and political appetite to absorb domestic hits to advance the regional common good? Finding the amicable balance between domestic interests and the undeniable benefits of regional cooperation will be key in India realising its regional leadership potential. RCEP lays bare the reality that India has yet to find this balance. Until and unless India finds this balance, it will not be taken as a consequential strategic partner in the region.

India’s withdrawal from the RCEP sounds the death knell to the Indo-Pacific concept. It also raises doubts about India’s commitment to the emerging concept.

From a broader perspective, India’s backpedalling on RCEP has put the focus on the fundamental principle of the Indo-Pacific concept which rests on the seamless connectivity of the Indian and Pacific oceans. While this contention holds true in the maritime domain which supports more than 50% of the world’s trade, the link between the two geopolitical spaces is less obvious. RCEP is proof that the geopolitical links are not a given. In this respect, Indo-Pacific failed its first substantive test when the project to link the geopolitical spaces of South, Southeast, Northeast Asia and Australasia suffered a setback upon India’s withdrawal from RCEP.

The US withdrawal from the Trans Pacific Partnership (TPP) agreement had the same damning effect on the strategic value of the Indo-Pacific concept as the organising principle for inter-regional cooperation. Without substantive links such as RCEP and TPP, the Indo-Pacific will remain a rhetorical concept at best. Without India, all that remains of the Indo-Pacific is the Pacific. Similarly, without the US, all that is left of the Indo-Pacific is “Indo.” India’s withdrawal from RCEP is the death knell of Indo-Pacific. It also raises doubts about India’s commitment to the concept.

With the India “question” now clear, the path is cleared for RCEP-15 to work towards a speedy conclusion of the regional trade pact. RCEP-15 changes the spirit and form of ASEAN-led regionalism, and India’s absence will be deeply felt and missed. It would be a mistake for ASEAN to treat India’s withdrawal from RCEP as a “terminal separation.” Instead both sides must redouble their efforts to build strategic bridges to ensure that the ASEAN-India Dialogue Partner relations are unaffected.