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Nur Aisha Abd. Wahab


Bangkok Post



Why RCEP requires greater effort

Bangkok Post (12/03/2019) - After nearly six years and 26 rounds of bargaining, it is time for the negotiating team to stop playing games and move forward for the common good of the East Asian region. Judging from the latest round of top-level meetings and negotiations in Siem Reap, Cambodia, at the end of February, it is still difficult to conclude the Asean-led Regional Comprehensive Economic Partnership (RCEP) under Thai chairmanship, unless its leaders give their negotiators a big push. No more dilly-dallying.

Of late, quite a few countries have been acting selfishly, trying to link one issue to others, while other nations have brought up new issues, making a common approach extremely difficult. This is not the time for playing cat-and-mouse games. Every minute counts in determining whether the world's largest economic free trade bloc will become a reality in the near future. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or TPP11, has effectively demonstrated that their leaders' political will and deep commitment led to the agreement, even without the United States.

At Siem Reap, the trade ministers of 16 countries -- Asean's 10 members, plus China, Japan, South Korea, Australia, New Zealand and India --were able to agree on the next steps to narrow the gap on issues related to market access and tariff reduction among their peers. There will be up to eight RCEP negotiation meetings this year, with at least four meetings among various committees. Their outcomes will be presented this November at the 3rd RCEP summit.

 Lest we forget, the RCEP started as an Asean concept in 2011 when the grouping felt that member countries needed to further consolidate their existing five Asean free trade agreements with dialogue partners. Today, Asean has signed six FTAs with Australia, Japan, China, South Korea, New Zealand and India. The first round of RCEP negotiations began in earnest in Brunei in May 2013. The 25th round was held in Bali last month.

Sensing the importance of the Siem Reap meeting, Prime Minister Hun Sen took the opportunity to make his presence felt in his opening remarks at the 7th RCEP Ministerial Meeting. He reminded negotiators of RCEP's uniqueness and its treatment of various levels of economic development. Unlike TPP11, the RCEP framework gives preferential treatment and more flexibility to lesser-developed economies.

With elections due this year in four RCEP countries -- India, Australia, Indonesia and Thailand -- some were not able to make strong commitments to market access and tariff reduction. To the rest of the negotiators, such recalcitrance was perceived as being an excuse to drag out the negotiations.

One could feel anxious looking at the matrix of progress on market access and reservation lists, symbolised by three colours -- green, yellow and orange -- indicating different levels of success. Green, with means an agreement was accomplished, got a progress rating of 46.2%; yellow, which means agreements are highly likely this year, received 44.4%; and orange, means which it will be difficult to forgen an agreement in the next nine months, was at 9.4%.

India has more orange and yellow than the other RCEP countries. The negotiators are hoping that after its elections in May, India will be more forthcoming on services. In a similar vein, both Indonesia and Australia are likely to have much clearer contributions and offers after their respective elections. For Thailand as chair, the RCEP stakes are very high.

Unlike other countries' elections, the March 24 election here is a moot point as far as the RCEP negotiations are concerned. It will have little or no influence on the chair's commitment to concluding the RCEP.

Throughout the electoral campaign among major political parties, issues related to market access or tariff reductions, in or outside Asean frameworks, have never been highlighted or politicised. They all support free trade. As the polls draw near, campaign pitches are focusing on poverty eradication, ending corruption, decentralisation, legalising marijuana and populist policies.

Beyond the region, global uncertainties have lent urgency to concluding the RCEP; otherwise, the negotiating process will lose its lustre and credibility, as members could become more rigid.

As time is growing short, it is imperative that each member be flexible enough to move up or down to find a landing zone that is agreeable in the negotiations. Truth be told, the overlapping of various FTAs among RCEP members has made the trade-negotiating environment very challenging.

At the Siem Reap meeting, the chair urged the technical team to be more positive and constructive in trying to solve problems, instead of creating more. Indeed, among Asean negotiators, sometimes it was difficult for them to come together on Asean positions.

Indeed, frequent changes in ministries and governments in the grouping have also slowed down the negotiations. It is notable that the number of negotiators has increased greatly, from about 65 during the first round in 2012 to nearly 750 in the latest round.

In order to move ahead at this critical juncture, all negotiators must increase mutual trust and stop the "trade-off" strategy, as it no longer works in the multi-party negotiations. All RCEP members must be realistic and must not mix their experience of negotiating other FTAs with the RCEP.

Since seven of 11 members of TPP11 are in the RCEP, and four are Asean members, there have been attempts to transform the RCEP into the TPP11 process. Some may have thought both frameworks could be combined in the future. Such a perception could further complicate the process of realising the RCEP.

Some major FTAs have been concluded. Others are under negotiation, such as the Nafta, EU Mercosur, China-Japan-Korea, EU-Mexico and TPP11.

The combined GDP of TPP11 is the smallest at UScopy0.2 trillion. Other bilateral FTAs are much bigger. For instance, the Japan-EU free trade bloc is US$21.3 trillion, while the Nafta is US$21.1 trillion.

The combined GDP of the RCEP is US$3 triillion, almost double that of TPP11, representing 31.6% of global production, 28.5% of global trade, and one-fifth of global foreign direct investment flows in 2016.

In short, it is incumbent on the Thai chair to convince all members to be more flexible in their approaches as they head for the finish line.

Read more at https://www.bangkokpost.com/opinion/opinion/1642984/why-rcep-requires-greater-effort