India a dark spot on regional trade deal, says forum chief

An agreement on the Regional Comprehensive Economic Partnership (RCEP) is good news for New Zealand but is tempered by the absence of India and the shadow of the ongoing trade war, says Stephen Jacobi, executive director for the NZ International Business Forum.

An agreement on the text for the RCEP agreement has been signed by 15 nations including New Zealand Australia, China, South Korea and

Japan as well as the South East Asian nations of the ASEAN trade trading bloc.

But India — the only country in the RCEP group that New Zealand doesn’t have an existing trade agreement with — did not agree to the text, leaving open the possibility the deal will be signed without it.

As an alternative to the whole deal falling over it was good news, Jacobi said.

“It’s more about the signal it sends to the rest of the world. It’s about

China standing with ASEAN.”

While that was good, it was likely any commercial gains would be limited until India joined, he said.

“It sends a very positive signal so let’s bank that,” Jacobi says.

Even without India the RCEP group still represents more than 50 per cent of New Zealand’s total exports.

For those other countries it would be a case of incrementally improving existing agreements.

“We’d probably be extending some of the agreements we’ve got in areas that have been difficult . . . so I would look for things in the services area, or in investment rules,” Jacobi said.

“I doubt that on market access there is much more that can be squeezed out, but you never know.”

India opted not to agree to the text, citing significant concerns about opening its markets to goods from China and — crucially for New Zealand — foreign dairy companies.

However it has retained the right to sign up if issues can be worked through. The next opportunity for progress was likely at a meeting in February, Jacobi said.

The agreement had at least been a boost for those that believed these big plurilateral deals were still possible, he said. “But the trade war casts a big shadow and I think we’ve got a lot of work to do to get us back to where we were.

“I’m pleased to see we’re still making progress, that our Government is still in the business of being able to deliver trade agreements.”