Reconsidering CPTPP, Integrating with ASEAN & EU

Rethinking CPTPP and Multilateral Trade Integration: A Necessary Gamble for India

India’s traditional caution towards high-standard trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is no longer tenable in an era of regional economic alliances. The rising tides of protectionism, coupled with India’s limited presence in global value chains, necessitate bold recalibration rather than incremental hesitation. India’s bid for CPTPP membership and deeper integration with ASEAN and the European Union (EU) isn’t merely an economic imperative—it’s a strategic gamble potentially reshaping its future geopolitical footprint.

The Institutional Landscape: Trade Architecture and India’s Hesitations

At first glance, CPTPP’s rigid commitments to labor rights, environmental protections, and intellectual property norms appear incompatible with India’s domestic policy priorities. It was precisely such regulatory challenges and fears of import competition that prompted India’s withdrawal from the Regional Comprehensive Economic Partnership (RCEP) in 2019. Furthermore, India has been reluctant to finalize free trade agreements (FTAs) with blocs such as the EU due to contentious demands like tariff elimination on automobiles, wines, and dairy.

Yet, CPTPP represents a market valued at $13.5 trillion, with member nations accounting for 13% of global GDP. Similarly, ASEAN’s deep integration into global value chains in manufacturing and electronics positions it as an indispensable partner for India’s economic diversification. The ASEAN-India Free Trade Agreement (AIFTA), operational since 2010, has already facilitated bilateral merchandise trade worth over $130 billion as of 2024. Meanwhile, the stalled India-EU FTA negotiations could unlock partnerships in advanced manufacturing and green technology sectors.

Argument: Why CPTPP and Multilateralism Matter

Among the most compelling reasons for India’s potential CPTPP engagement lies in market diversification. India’s overdependence on geographies such as the US and China exposes its trade ecosystem to geopolitical volatility. CPTPP membership could expand India’s foothold in the Indo-Pacific, complementing its Act East policy and countering China’s dominance in regional trade blocs.

Another argument pivots on India’s need for supply chain integration. CPTPP members—including Japan and Vietnam—are leaders in advanced manufacturing, digital trade, and standards compliance, areas where India’s exports lag behind. For instance, India’s logistics costs—estimated at 13-14% of GDP—are significantly higher than global benchmarks, restricting export competitiveness. Joining CPTPP could foster reforms in domestic standards, reducing these inefficiencies.

Likewise, strengthening connectivity with ASEAN remains crucial. The bloc’s cohesive value chain networks present an opportunity for India’s fractured MSME sector, which struggles with international compliance despite accounting for 40% of India’s exports. A recalibrated AIFTA, particularly addressing non-tariff barriers, could integrate MSMEs into regional networks.

Parallelly, the India-EU FTA is an economic imperative. The EU is India’s second-largest trading partner and offers access to high-income markets. Sectors such as clean energy technology, digital services, and innovation stand poised to benefit from a structured trade relationship.

Institutional Critique: Misplaced Protectionism and Regulatory Capture

India’s cautious posture on trade liberalization stems from misplaced protectionism aimed at shielding domestic industries. The agriculture and manufacturing sectors often cite fears of competition from cheaper imports to justify high tariffs. However, such protectionist policies have hampered export growth instead of nurturing global competitiveness. National Sample Survey Organization (NSSO) data shows that export-oriented manufacturing clusters experience higher productivity compared to industries reliant on domestic consumption—a gap that cannot be bridged without access to global markets.

Equally detrimental is India’s fragmented regulatory environment. Complex customs procedures, uneven logistics infrastructure, and inconsistent enforcement of labor incentives undermine India’s trade potential. According to the World Bank’s Logistics Performance Index (2023), India ranks 44th, far behind most CPTPP and ASEAN member countries. Without institutional reforms targeting these bottlenecks, trade integration will remain a theoretical aspiration.

Counter-Narrative: Why CPTPP May Not Be Feasible

The strongest argument against India’s CPTPP entry lies in the agreement’s stringent compliance standards. Labor rights and environmental safeguards—championed heavily within CPTPP—pose challenges for India, where enforcement mechanisms remain weak. For instance, India’s labor codes introduced in 2020 consolidate labor laws but fail to adequately address worker representation. Joining CPTPP without domestic readiness could expose India to trade dispute mechanisms.

Additionally, CPTPP dynamics could marginalize smaller economies amid unequal power structures. India’s experience with RCEP demonstrates concerns about larger economies disproportionately benefitting at the expense of smaller participants—a caution reiterated by skeptics of CPTPP.

International Perspective: Vietnam’s Success in CPTPP

Vietnam’s trajectory within CPTPP offers a pointed comparison for India. A country that initially relied on low-skill manufacturing successfully revamped its trade standards, earning high returns in electronics and industrial manufacturing sectors post-entry. Vietnam’s export growth surged by 12% annually between 2018 and 2023, highlighting how CPTPP compliance facilitates broader economic benefits. For India, Vietnam provides lessons in targeted capacity-building initiatives aligned with multilateral frameworks.

Assessment: Balancing Strategy and Structural Reforms

India’s trade policy is at a crossroads—standing still is not an option. A phased entry strategy into CPTPP, beginning with services and digital trade, could offer a pragmatic launchpad. Simultaneously, upgrading domestic infrastructure such as bonded warehouses and customs digitization remains non-negotiable.

For ASEAN and the EU, India’s immediate priority must be finalizing balanced FTAs that accommodate legitimate sensitivities without undermining industrial advancement. Coordinating trade goals with geopolitical partnerships such as QUAD ensures complementarities across security and economic domains. Ultimately, India must shed dated apprehensions around trade liberalization—a re-entry into regionalism is no longer an option, but a necessity.

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