Using RCEP as a Stepping Stone to East Asia: Case Studies of Sri Lanka and India

Abstract

This paper explores the economic implications of the globally important Regional Comprehensive Economic Partnership (RCEP) for South Asia through case studies of post-conflict Sri Lanka and India. The results of model-based studies suggest that, as a member, India is the only country in South Asia to potentially gain, but its gains depend on the depth of the RCEP agreement. Excluded Sri Lanka, however, will likely see losses from trade diversion and erosion of preferences from the RCEP. Sri Lanka is attempting to use the recent free trade agreement (FTA) with Singapore as a stepping stone to East Asia. But both Singapore and Sri Lanka need to do more to ensure that the benefits flow to Sri Lanka. Further afield, Sri Lanka could learn useful lessons from India's long experience of the RCEP negotiations including liberalizing goods and services trade and adopting new intellectual property rules. A renewed partnership between Indian businesses and government will help prepare for market opening under the RCEP.