RCEP finale: Double U-turn intrigue
With the Regional Comprehensive Economic Partnership (RCEP) approaching its final stages, some Asean countries are revealing what can only be described as erratic behaviour. They have unexpectedly come up with a new position, one previously hidden under their smiles. In other words, they have made another U-turn from their previous position.
Changing positions at a working level is common during negotiations. During the RCEP summit in Bangkok, however, a new challenge emerged as changes in position came from the ministerial level — a practice previously unheard of.
At the Asean caucus meeting on the RCEP in Hanoi last week, all Asean members gradually came out of the closet. The new Asean chair, Vietnam, faces a challenging task in achieving consensus among its colleagues before meeting with the six other RCEP dialogue partners. Vietnam is a powerful influencer during the crucial phase of negotiations. Last November, the ministers from all 15 countries agreed with India over the tariff concession. However, in the cold light of day, Vietnam revealed a different position. Hanoi managed to turn around the ministerial decision.
In Hanoi, the Asean negotiators focused on two key issues, as outlined in paragraphs 5 and 6 of the Joint Statement of RCEP Summit issued on Nov 4, 2019 in Bangkok. It stipulates that all members would undertake some legal scrubbing to prepare for the RCEP signing this year. This task is not difficult as legal experts are doing their jobs effectively. However, the most important task pertained to India’s participation.
“India has significant outstanding issues and these 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 the satisfactory resolution of these issues,” read the statement from the leaders, making it clear that in the remaining 10 months, all efforts must be expended to work on compromise formulas that would win the backing of both supporters of India’s inclusion and its detractors.
As the Asean chair, Vietnam has now become a very enthusiastic consensus builder in encouraging all Asean members to reach a decision on India. Somehow, though, this has proved problematic due to some hardline stands held by specific Asean members. The caucus meeting last week ended with a great deal of wording on which members have yet to agree.
With its large population, complicated domestic factors, huge trade deficit and an abundance of less-developed sectors in terms of agriculture, logistics and SMEs, India has always been the main target as a slow mover. India’s Act East policy is now in jeopardy as New Delhi still cannot get its act together.
Since 1992, India has been embarking on forging closer ties with Asia. It took nearly two decades for the Look East policy to morph into the next level, Act East policy. Now India stands at the precipice — join the RCEP or be left out as the biggest loser.
All along, India understands its weaknesses so it needs some guarantees, such as an auto-trigger mechanism if things go wrong that would allow for immediate correction. Despite the government of Prime Minister Narendra Modi’s desire to join the RCEP, strong opposition from members of parliament. public opinion and local conditions have so far prevented him from fulfilling his promise. In the world’s largest democracy, the public voice and its support are very powerful.
For instance, India applies various investment laws and terms at different levels — both national and local. Indeed, local authorities are as powerful as the national ones. In the case of Vietnam, which is quite unique, there is so much differentiation. The country has one investment law that covers the whole country. As the current Asean chair, Vietnam must find creative ways to work out a compromise if India and other members with similar investment laws are to join the RCEP.
At this juncture, Japan has been the most active of the RCEP members in taking up the so-called “mission impossible”, as an Asean diplomat put it, to engage the RCEP 15 not to give up hopes on India. Despite the negative reports about India, Japanese officials have diligently travelled to all Asean members to discuss ideas to save India. Japan has made it clear that the RCEP is for 16 member countries, not 15. There was some speculation that Tokyo could abandon the RCEP if New Delhi was not on board. It was a misnomer. Less we forget, Japan led and signed up to a new version of the defunct Tran-Pacific Partnership, known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership after the US left.
Relations among the 16 are all about give and take. The nature of their bilateral trade relations shows the depth of their mutual benefits. For instance, Singapore and India have very close all-round relations. The two RCEP participants signed the Comprehensive Economic Cooperation Agreement back in 2005. Singapore was also the largest foreign investor in India, spending US$16.2 billion (491 billion baht) during 2018-2019.
It is interesting to note that in Hanoi, Indonesia indicated for the first time that it would go ahead with the RCEP signing with or without India. Certain Asean members have again been referring to the Indian fatigue syndrome — the inability to get any concessions from India after long negotiations. It is not wrong to say if the RCEP 15 goes ahead, it would be a big victory for India’s detractors in Asean.
Miraculously, there has not been any U-turn among non-Asean members including Australia, Japan, New Zealand, South Korea and China. They have been cooperative and supportive of India to ensure its membership due to its untapped gigantic market. At this juncture, it remains to be seen how the latest divergent views among Asean members will play out.
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The new Asean chair, Vietnam, faces a challenging task in achieving consensus among its colleagues.