ASEAN PUSHES TRADE PACT; CHINA EYED
The United States’ withdrawal from the Trans-Pacific Partnership and policy uncertainties cast by President Donald Trump’s protectionist leanings have led Asian countries to push ahead with the Regional Comprehensive Economic Partnership (RCEP) that will exclude the United States. Southeast Asian nations this year will put priority on creating an Asia-focused trade pact that includes China, India and Japan. With China putting its weight behind it, RCEP has emerged as the best alternative to lowering tariffs in the region.
Southeast Asian countries this year will prioritize creating an Asia-focused trade pact that includes China, India and Japan, while trade issues with the United States will be put on the back burner, the Philippine trade minister said on Tuesday.
The US withdrawal from the Trans-Pacific Partnership (TPP) and policy uncertainties cast by President Donald Trump’s protectionist leanings have spurred Asian countries to push ahead with the Regional Comprehensive Economic Partnership (RCEP), Trade Secretary Ramon Lopez told Reuters.
“That to us would be more of a priority rather than other countries working on another agreement,” Lopez said of RCEP during an interview ahead of a summit of the 10 members of the Association of Southeast Asian Nations (Asean) in Manila.
“Everybody would, of course like, to have a greater economic relationship with the US, they are a big country, one of the biggest consumers as well, but it may not rank high on the Asean agenda,” Lopez said.
US withdrawal
Asean first pushed the idea for RCEP in 2012, but it became eclipsed by the TPP, which then US President Barack Obama had promoted as a progressive deal that would prevent China from “writing the rules of global trade.”
Four Asean members— Brunei, Malaysia, Singapore and Vietnam—had signed up to TPP, but the pact has lost twothirds of its members combined gross domestic product when the United States backed out.
And with China putting its weight behind RCEP, it has emerged as the best alternative to lowering tariffs in the region for Asia’s export-driven economies.
RCEP would bring Asean—a trading community of 620 million people with a combined GDP of $2.6 trillion—together with six other countries: Japan, India, New Zealand, Australia, South Korea and China.
Since the election in Novem- ber of a protectionist-minded US president, China has emerged as arguably the biggest advocate of trade liberalization.
Mutually beneficial
China denies it is leading RCEP, and Lopez said the deal would not be skewed in favor of larger nations.
“All the countries are looking at what’s mutually beneficial for all, it won’t be lopsided, let’s say, in favor of China. China is one of the participants,” he said.
“What we’re all talking about in RCEP is to what extent can we review the products, the products that need to be liberal- ized for free trade,” he said.
Lopez said trade was not expected to figure prominently at the Asean summit starting on Saturday, but leaders would be pushing for a conclusion of RCEP by the end of this year.
The Philippine minister said Trump’s rhetoric on trade was a concern for Southeast Asia’s export-driven economies, but they hoped he would soften his stance, recognizing that an inward looking approach would ultimately hurt the US economy.
“What we just hope is that the US won’t really come up with policies that will really be protectionist,” he said.