Japan’s retreat from RCEP augurs well for bilateral relations with India
Japanese are known for ethnocentric mindset. This gives an opportunity for a quick collective decision, even in a strong democratic pattern of society. The sudden about-turn of Japan for not joining RCEP without India is a case in point. It puzzled the whole world and put Indian negotiators in confusion. The observers were agog as what made Japan dragging its feet. Even in the last round of negotiation in Vietnam, not the slightest indication was made by Japan when India was dilly-dallying in joining the block.
Some observers believed the twist was the outcome of 2nd India–Japan 2+2 Foreign and Defence Ministerial Meeting in New Delhi on November 30, 2019. It stemmed from Japan's balancing between trade benefits and outreach in political security in the Indo-Pacific Region.
Both sides exchanged views on the new look to Indo-Pacific Region and their respective roles from the perspectives of India's Act East Asia Policy and Japan's "Free and Open Indo-Pacific Vision". This reflected a spur their relation, increasing influence in the region.
So far, Indo-Japan cooperation was driven by bilateral issues, limited to economic matters. Both have historical hostility with China. India had to counter a military war with China in 1961 relating to border disputes. Japan has a historical feud with China owing to Japan's atrocity in pre-war and maritime disputes.
After holding the 2nd India–Japan 2+2 dialogue, which seemed to be more effective, both sides provided opportunities to give a strong spine to Indo–Japan special strategic and global partnership in political security.
The dialogue made a big success in bringing India and Japan closer, even beyond the bilateral economic relation, and that is political security. Hitherto, the first India-Japan 2+2 dialogue was held in 2010 between the Foreign Secretaries of both sides. The 2nd India–Japan 2+2 meeting at Ministerial level is a better version, which deciphers that the cooperation on political security has reached a new high. This signalled that political security has become a new dynamism in the India–Japan relation, which replaced economic relation.
Factors attributing to Japan about-turn to RCEP were India's increasing significance in the Indian Ocean — a major part of Indo-Pacific Region — and Japan's overarching Africa for better market accessibility with the help of India's strong footprint in the continent.
After PM Modi became assertive for India's role in East Asia, upgrading the campaign and policy strategies from "Look East" to "Act East Asia", India and Japan became ambitious to be major powers to counter China, which was fast a growing influence in East Asia, such as South China Sea and South East Asia through BRI (Belt and Road Initiative), according to Director of the Centre for Indian Studies at China West Normal University, Long Xingchun. The rise of China becomes a big concern for India and Japan and that becomes vital for the two countries to come together, according to the Chinese Director.
China viewed the new closeness between India and Japan as an imperative to counter it. This is because it believes that it is almost impossible for both countries to confront China individually after China reached superpower both in terms of economy and defence. When initially, RCEP was proposed to be formed, it had 13 countries, including ASEAN 10 and China, South Korea and Japan. India was not included. It was Japan, who insisted to include India, with Australia and New Zealand.
In fact, China was reluctant to include India initially, presumably portending hard bargain and counter from India. The situation changed with Trumps' culmination of a trade war with China. China is an export-based economy and USA is the biggest destination for its exports. With the loss of trade opportunities to USA, which has already inflicted China's GDP growth, trade war forced China to make a volta face to India in search of a big market.
In addition, having an eye in the Africa market, India–Japan clung cooperation for Asia-Africa Growth Corridor (AAGC) to counter China.
RCEP is not merely a trade block. More than this, it is portended a political platform where China will have more muscles to influence in Indo-Pacific Region through trade supremacy.
Moreover, it is not ensured that Japan will gain from trade expansion in the RCEP, given the present trend of trade relationship with the block. Japan is already reeling under trade deficit with the block. The main factor attributing to it is China. China accounted for 41.5 per cent of trade deficit between Japan and RCEP nations. It is suspected that RCEP may widen the trade deficit and dampen Japan's overall trade surplus with the world, had Japan joined the block. For example, in 2018, RCEP accounted for 46.3 per cent of Japan's export and 49.7 per cent of Japan's imports. This means RCEP will play a key role in Japan's trade, inching towards narrowing its trade surplus. This calls for a warning bell for Japanese trade if it joins RCEP.
Against this backdrop, India would have posed an insulation for Japan, had it joined RCEP. Given the second-biggest market in the block, Japan could expand its exports to India after availing the tariff benefits. India and Japan have bilateral FTA. But, that could not unleash any major impact on Japan's export to India. RCEP would have been boon as because it could open multiple doors for Japanese subsidiaries in the block to export to India through the channel of GVC — the new concept expected to set off in Make in India initiative.
In summing up, Japanese about-turn to RCEP and reposing confidence in India demonstrate a major transformation in India–Japan relation from bilateral economy issues to political dynamism from the perspectives of global partnership.
Views expressed are strictly personal