Hong Kong: When it comes to sweeping global free-trade agreements, President Donald Trump isn’t the only party-pooper.
Two years after Trump withdrew the United States from a 12-nation deal known as the TPP, Prime Minister Narendra Modi has pulled India out of a 16-nation grouping led by China known as the RCEP. In both cases, protectionism played a part; in both cases, the show goes on.
> What is the RCEP?What began in 2012 as a routine harmonising of agreements between members of Asean, turned into a deal creating potentially the world’s biggest free trade bloc. The Regional Comprehensive Economic Partnership, to give its full name, is aimed at strengthening trading ties among China and others with Asean members. Broadly speaking, it would lower tariffs and other barriers to the trade of goods among the 16 countries that were in, or had existing trade deals with, Asean.
> But that’s now down to 15 nations?Correct. India pulled out in November saying it wanted to protect service workers and farmers. There were also worries the country would be flooded by cheap goods from China. Modi had pushed the other nations to address concerns over deficits and to open their markets to Indian services and investments.
> Is India’s loss a big deal?It would have been the third-biggest economy in the RCEP, so yes. On the other hand, China has been seeking to tie up the deal expeditiously as the country faces slowing growth from a trade war with the United States. It is also looking to further integrate with regional economies just as the Trump administration urges Asian nations to shun Chinese infrastructure loans and 5G technology. China says India is welcome to come back aboard whenever it’s ready.
> What’s different about the RCEP?Unlike the TPP and other US-led trade deals, the RCEP wouldn’t require its members to take steps to liberalise their economies, protect labour rights and environmental standards and protect intellectual property. According to US Commerce Secretary Wilbur Ross, it’s a “very low-grade treaty” that lacks the scope of the Trans-Pacific Partnership, or TPP.
> What happened to the TPP?It became the the CPTPP, or Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Signed in March 2018, it’s already in force for seven of the 11 signatories. They decided to press on after Trump signed an executive order in 2017, shortly after coming to office, withdrawing the United States, saying he wanted to get fairer deals.
> How close is the RCEP to being finalised?More than a dozen rounds of talks have been held since 2012. The 15 remaining countries have signalled they now plan to sign the deal in 2020.
> Which countries are on which side?Seven nations – Australia, Brunei, Japan, Malaysia, New Zealand, Singapore and Vietnam – participated in negotiations for both deals. The United States, Canada, Chile, Mexico and Peru are TPP-only negotiators, while RCEP-only countries, other than China, are Cambodia, India, Indonesia, Laos, Myanmar, Philippines, South Korea and Thailand. The United States hasn’t been deliberately excluded from the RCEP. — Bloomberg
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