Negotiators under pressure to strike free trade deal

TIME flies as they say. And the pressure is on for Regional Compre­hensive Economic Partner­ship (RCEP) negotiators from 16 countries as they meet in Perth this week to narrow the gap and possibly wrap up the free trade deal by year-end.

Last November at the Asean Summit in Kuala Lumpur, Asean leaders and six of their dialogue partners gave officials until the end of this year to conclude the RCEP.

They had missed the 2015 deadline set earlier.

With eight months left to conclude negotiations involving the Asean 10, Japan, India, China, New Zealand, Australia and South Korea, officials are intensifying efforts and planning to have four more meetings till end of the year.

A lot of focus was on the US-led Trans Pacific Partnership Agree­ment (TPPA) that news on the RCEP was rather muted.

When the TPPA negotiations were wrapped up last October after five years, the heat was on for RCEP officials to conclude the deal since negotiations started in May 2013.

RCEP officials held their first meeting of the year in Brunei in February, but it only involved goods, services, investment and rules of origin sectors.

“We needed to have that meeting in Brunei because there is still so much work to be done in these areas,” said an official.

The full group meeting will take place in Perth between April 22 and April 29.

There are 14 negotiating groups, including goods; services; investment; intellectual property rights; e-commerce; customs; financial services; rules of origin; and telecommunications services.

E-commerce had just been included as one of the groups during RCEP negotiations in Naypyitaw last year.

The RCEP is a natural progression from the Asean plus one FTAs with its six dialogue partners to create a single FTA among them.

It is also market-driven. The RCEP is aimed to ease trade procedures and boost the flow of trade and investment within the Asia-Pacific region.

The businesses in RCEP countries are intertwined and there are a lot of exchanges of products among firms within the region.

The private sector expects a more harmonious and seamless flow of goods, services and investment in the region to further reduce cost and enhance economic growth in the region.

If the TPPA covers 12 countries involving 40% of the world’s economy, the RCEP covers 50% of the world population as it involves the two most populous countries – China and India.

The RCEP has proven to be a very complex situation and challenging to the 16 countries.

It involves developed, developing and least developing countries representing a diverse group of nations.

Some of these countries may not have bilateral FTAs with each other as in the case of China and India or China and Japan. At the same time, countries like New Zealand, Australia and Japan which are in the TPPA have their own ambitious targets in trade negotiations they are involved in.

Can China and India meet these ambitious targets set by the more developed countries in the RCEP?

A case in point is the tricky goods sector. Officials were on edge as it had impeded negotiations. So, when Malaysia hosted the Asean Eco­nomic Ministers meeting last August, it convened a RCEP meeting.

It was tough to get everybody on board for the concessions for goods.

But thanks to Malaysia’s expertise, all countries agreed to finalise the modalities for the goods sector to meet the aspiration to eliminate tariff by up to 80% in 10 years from 65% when the RCEP eventually comes into force, hopefully by January 2018.

“Now that the modalities have more or else been finalised, we just have to comply with the modalities.

“When you comply with the modalities, you comply with market access.

“This is where the discussion is going on. There are 16 countries, each of us has to talk to each other,” said an official familiar with the negotiations.

Market access is a big issue facing the RCEP as in the case of China or India. They cannot be expected to open up easily, especially when they have no FTA with another country in the RCEP.

“The market access will be difficult for China and India. They cannot just liberalise, especially when they have big population dependent on the agriculture sector. So it takes time,” said an official.

The Perth meeting will be the 12th negotiating round. It is a critical one as the trade ministers are expecting substantive progress, including the legal text for the various chapters.

Many have said the RCEP is not ambitious and comparisons are often made with the TPPA, described as having the gold standard in a free trade deal and opening of new markets for Malaysia.

A quick look at the trade statistics among the 16 countries in the region show how important they are to the Malaysian economy.

Last year, 62.5% of Malaysia’s global trade was with the 15 countries in the RCEP, totalling US$234.71bil (RM909.3bil).

Malaysia’s exports to RCEP countries amounted to US$124bil (RM480bil) or 62% of the country’s global exports.

As the hundreds of officials huddle in the meetings until next Friday, let’s just hope they are really talking to each other to benefit half of the world’s population and improve the standard of living for billions of people via economic integration.

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RCEP Perth , free trade , TPPA , Asean , Government , Malaysia ,


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