India’s exit from RCEP leaves China and Japan at odds

India’s exit from the China-backed Regional Comprehensive Economic Partnership (RCEP) regional trade talks appeared to leave China and Japan at odds over whether to press ahead with the remaining members, or to try to find a workaround that includes Prime Minister Narendra Modi’s government.

India announced on Monday it was withdrawing from the RCEP, citing the deal’s potential impact on the livelihoods of its most vulnerable citizens.

China had said the 15 remaining countries decided to move forward first and India was welcome to join RCEP whenever it was ready.

But Japanese Trade Minister Hiroshi Kajiyama said yesterday Tokyo would work towards a deal that included India.

This would keep the world’s largest democracy within the RCEP framework and be in line with Prime Minister Shinzo Abe’s policy of bolstering ties with India to balance Beijing’s growing power.

“Our country wants to play a leading role towards reaching an early agreement between all 16 countries, including India, with the aim of signing it next year,” said Kajiyama.

India’s exit from negotiations coincided with the recent meeting of officials from the Quad — Japan, Australia, the United States and India — a securityfocused grouping seen as a counter to China that has drawn Beijing’s ire.

China has sought to accelerate the RCEP deal as it faces slowing growth from a trade war with the US.

An agreement would further integrate Asia’s economies with China just as President Donald Trump’s administration urges nations in the region to shun Chinese infrastructure loans and 5G telecommunications technology.

Indonesian Foreign Minister Retno Marsudi said India still had problems with RCEP but all those in the process “will work together to solve these problems in a mutually satisfying way”.

Modi decided not to join the deal in order to protect service workers and farmers, said an official in New Delhi on Monday.

RCEP nations were likely to move forward without India, in part because a pact could be concluded easily and quickly that way, said Juan Sebastian CortesSanchez, a senior trade policy analyst at the Singapore-based Asian Trade Centre research institute.