China-championed Asia trade pact gains traction in Jakarta
The 16 countries seeking the Regional Comprehensive Economic Partnership accelerated their efforts during talks last week as rising protectionism threatens a system that has lifted hundreds of millions of Asians out of poverty.
THE US’s imminent exit from a massive Asia-Pacific trade deal has renewed urgency among nations huddled in Indonesia to hammer out a separate, China-backed pact.
The 16 countries seeking the Regional Comprehensive Economic Partnership accelerated their efforts during talks last week as rising protectionism threatens a system that has lifted hundreds of millions of Asians out of poverty. Negotiators said they neared agreement on protections and assistance related to smalland-medium- sized enterprises, and also made progress on competition policy.
Matters such as intellectual property rights, as well as trade in goods and services, remain unresolved. The next talks will be held in Japan in February.
“The Asian region generally appreciates that trade and engagement with the world is crucial to higher living standards in the future,” Australian Trade Minister Steve Ciobo said in Jakarta last Wednesday, as his country and Indonesia push ahead with a bilateral trade pact. “That’s a point of contrast in some respects to other parts of the world, where they have adopted a more protectionist approach.”
Focus on the RCEP, which was launched four years ago and could potentially create the world’s biggest free-trade bloc, has sharpened as US President- elect Donald Trump prepares to quit the Trans-Pacific Partnership. Trump’s elevation has seen China become an unlikely champion of trade liberalisation at a time other protectionist headwinds are blowing: The World Trade Organisation projects the slowest growth in trade since the global financial crisis, while the UK’s decision to leave the European Union has added to the uncertainty.
The TPP was the economic component of the Obama administration’s effort to assert US influence in the region amid China’s military and economic rise. For China, which is a party to the RCEP but not the TPP, Trump’s election has created an opportunity to push ahead with an Asia-focused agreement that the US is not involved in.
Chinese President Xi Jinping cited the deal last month among the measures needed to integrate his country into the global economy. A Ministry of Commerce spokesman said Nov 24 that China wanted to seal the RCEP deal as soon as possible.
“This is an opportunity for RCEP members to drive the process,” said Carlos Kuriyama, a senior trade analyst with the Asia-Pacific Economic Cooperation secretariat, giving his personnel view. “If TPP doesn’t go through, they can try and cover that hole.”
The RCEP aims to levy tariffs and rules on the region’s supply chains, liberalise investment and introduce dispute-resolution mechanisms. Unlike the TPP, it wouldn’t require members to take steps to protect labor rights or improve environmental standards. The deal, which includes Southeast Asian countries plus countries such as Australia and Japan, would cover almost half the world’s population and 30 per cent of the global economy.
Indonesian Trade Minister Enggartiasto Lukita told China’s official Xinhua News Agency on the sidelines of the RCEP talks that negotiations on goods, services and investment sectors were intensifying, with major disagreements persisting.