India's pullout from the Regional Comprehensive Economic Partnership (RCEP), like the earlier U.S. withdrawal from the Trans-Pacific Partnership, has created a dilemma for Japan. But whereas Japan took the lead to establish the TPP without the United States, Tokyo does not desire a RCEP without India because it would create a China-led trading bloc.
The 16-nation RCEP was supposed to establish the world's largest trading bloc covering half of the global population. But India's withdrawal from the RCEP has undercut that objective. It now seems likely that China will dominate the RCEP, which is set to be opened for signature next year.
The other 15 participating countries in November concluded text-based negotiations and sent the agreement to the legal scrubbing team for cleanup. A joint statement following the conclusion of the negotiations in Bangkok said, "India has significant outstanding issues, which remain unresolved. All RCEP participating countries will work together to resolve these outstanding issues in a mutually satisfactory way. India's final decision will depend on satisfactory resolution of these issues."