NVDB005_-_CH_3.012._India’s_Economic_Influence_in_the_Indo-Pacific_-_Mihir_S_Sharma-3

Diplomatic Briefing — KAS Cambodia and CICP

62 — DP Vol. 05

India’s Economic Influence

in the Indo-Pacific

Alternatives to RCEP?

So how is India using or creating economic influence in the region, if not through joining RCEP? The danger is that by withdrawing from RCEP and failing to join the other large trade pact in the Indo-Pacific, the Compre- hensive and Progressive Trans-Pacific Partnership or CPTPP, India will not just isolate itself economically, but also reduce its ability to use the size of its economy and market as a form of influence on the region. Previous attempts by India to join the Asia Pacific Economic Cooperation or APEC forum have also been denied. If India wishes to create a multipolar and inclusive Indo-Pacific, which is its stated policy, then it cannot give up on increasing its economic influence through greater integration with the economies of the region.

The main grouping through which India has so far sought to reshape the Indo-Pacific’s economic archi- tecture and exert its own economic influence is the Quad, which includes the United States, Australia, Japan, and India. While it has been known as a securi- ty-focused grouping – although not an alliance – the Quad has in recent years begun to focus more closely on geo-economic and development (though not neces- sarily explicitly trade-related) questions. In the last Quad summit at Tokyo, the four national leaders met along with the heads of their respective development agencies to begin work towards development cooper- ation in the Indo-Pacific.

Yet the Quad has many limitations as a mechanism for exerting India’s economic influence. Not only is it still seen as a security-first grouping, meant to manage and counter Beijing’s actions in the region, but it is also considered by many countries, particu- larly in Southeast Asia, as an exclusive grouping and

thus an object of suspicion. Repeated references to “ASEAN centrality” within the Indo-Pacific in Quad joint statements have thus far not helped to completely overcome such suspicion.

At the last Quad summit in Tokyo, the leaders also released the “Indo-Pacific Economic Framework” or IPEF, which has four modules under which economic cooperation between regional countries could be enhanced. There is a clear overlap between RCEP countries and the thirteen in the IPEF, which includes those of the Quad, South Korea, Fiji, New Zealand, seven members of ASEAN, and New Zealand. Besides China, RCEP members that are not in IPEF include Myanmar, Cambodia, and Laos.

The hope is that, although the IPEF has no planned element of tariff reductions and market access, it will nevertheless create a route by which trade and investment could be increased through the creation of common standards and regulatory norms, which may eventually be imposed through binding legal commit- ments.

In the absence of participation in classic trade blocs like RCEP or CPTPP, India has thus had to seek out other formats to expand its economic influence in the Indo-Pacific. It will likely seek APEC membership again in order to revitalize the forum and increase its voice in trading protocols within the region. But the primary mechanism in the near future will undoubtedly be the IPEF. This has the benefit of both satisfying those in New Delhi who continue to be hesitant about trade and those who are wary of strengthening blocs like RCEP which they see as creating “China centrality” in the Indo-Pacific region.