Explaining Hindu Nationalists’ Opposition to RCEP – The Diplomat

India’s decision not to join the Regional Comprehensive Economic Partnership (RCEP) has been widely covered this year. The concerns raised about the deal from various sections of the Indian economy – such as large steel producers, milk product providers, or agriculturalists – have also been sufficiently noted. What attracted little attention, however, is that the wide array of groups opposing RCEP included those belonging to the Rashtriya Swayamsevak Sangh (RSS): the Hindu nationalist organization closely tied to the ruling  Bharatiya Janata Party (BJP). Thus, while seriously considering joining RCEP for years, Narendra Modi’s government faced resistance to the idea from within its own ideological circle.

Broadly speaking, the Hindu nationalists’ views are divided between calling for a freer marker and demanding the government protect Indian companies from foreign competition. The former calls are more heard within the party, the BJP, while the latter are raised more within the organization, the RSS. The latter view arises from the idea of swadeshi: protecting the country’s products and companies. The same debates continue to reemerge year after year. I have, for instance, covered two recent cases of this for The Diplomat: the controversy around labor laws and the idea of privatizing Air India.

The most audible criticism came from the RSS’s forum for national economy, Swadeshi Jagran Manch (SJM). “There is no sector, no constituency or no region in India that will benefit from RCEP,” the body declared at the beginning of 2019. At that time it even suggested that signing the trade agreement or making commitments to it would have hurt the BJP’s chances during the parliamentary elections that were due that year (a prediction that appeared removed from reality). In October 2019, the SJM started a 10-day protest against RCEP, making it a rare – though not the only – situation in which a part of the RSS was protesting against the steps taken by its “own” party’s government. When in December 2019 the Modi government finally decided not to sign on the dotted line on the pages of free trade agreement, the SJM naturally praised this move. The second RSS sub-organization to loudly voice its concerns was the nationalist organization’s farmers union, Bharatiya Kisan Sangh. It stood with other bodies of agriculturalists when they organized anti-RCEP protests in 2019.

What most of the people opposing RCEP in India agreed on was the threat of rising imports from China; the attitudes toward free trade with all other RCEP members were certainly more divided. The shadow of China loomed over SJM’s attitude as well. China “is behind an iron-like curtain,” Swadeshi Jagran Manch declared, elaborating that Chinese authorities subsidize part of its production and that exact costs of production in China are unknown. Is it not astonishing, the organization asked, that while a global backlash against Beijing is growing, 14 countries (those that joined RCEP) are entering a free trade deal that will mostly benefit the 15th one – China?

The anti-RCEP camp also largely agreed on which sector of the economy would face mounting foreign competition. Here, it seems, there was no disagreement between the factions opposing RCEP from within and from outside of the government. The SJM was on the same page with other constituencies as it repeatedly pointed to the possibility of a wave of cheap agricultural and milk products flooding Indian markets and submerging local providers. For instance, Ashwani Majahan, one of the co-convenors of SJM, declared that powdered milk imported from New Zealand was cheaper than that produced in India (New Zealand has become an RCEP member), clearly showing that his primary concern was with the income of small Indian producers, not the savings of Indian buyers.

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The SJM also joined the ranks of individuals and organizations that opposed RCEP not only due to the China factor, but because of growing imports from countries like Japan or South Korea, a generally growing trade imbalance with ASEAN (both caused by signing earlier FTAs), and concerns about what future FTAs with Australia and New Zealand may cause. When New Delhi finally rejected joining RCEP, the SJM called for policymakers to take a look at those past deals. “We request the government to review the faulty free trade agreements (FTAs) and CEPA done with Japan, South Korea, and other countries,” the organization stated.

The broader consensus of the anti-RCEP camp was not about restricting the free market, however, but about general prudence in dealing with China and about a careful, gradual approach to reducing restrictions on imports, so that the fragile Indian economy would adapt to such changes. Moreover, the case of imports from China was special given India’s already massive trade imbalance with China combined with political tensions with Beijing. Even a supporter of the freer markets and globalization was likely to oppose a free trade deal with China given that that market is not really “free” on China’s end, given the massive influence of its government on the economy. 

Thus, despite the protectionist policies it was advocating, the wide opposition to RCEP in India was not dominated by the left’s perception of economy. In other words: Some of the people favoring the retention of restrictions on trade with China would not necessarily support the same solutions in case of imports from other countries, nor would they by default support other protectionist measures.

But when it came to sub-organizations like the Swadeshi Jagran Manch, their points against RCEP were based precisely on a worldview that stands against economic liberalization, a view that wants national production shielded by protectionist policies. It was not just free trading with China that this part of the RSS was rejecting but the unrestricted activities of large multinational companies on the Indian market as such. The SJM even issued a statement declaring that:

SJM rejects the fallacy of global value chains (GVC). For those who are advocating RCEP as an instrument to facilitate India’s integration with GVC, we would like to state that global or local, production value chains are not a homogenous string of production process; they are value chains driven by very large multinational companies which produce the final finished goods and reap maximum benefit out of that chain.

Thus, when such RSS bodies like the SJM speak of defending “national values” from the threat of foreign ones, it is not only the identity-related questions they speak of but the economic ones as well. The opposition from this quarter is likely to reemerge in the coming times, when India will be attempting to restart its FTA talks with the United States or the European Union and when it will continue its FTA negotiations with Australia and New Zealand.