RCEP — China Investment and Trade Agreement Enters into Final State
During the 33rd ASEAN Summit this month, Singapore’s Prime Minister Lee Hsien Loong revealed that the Regional Comprehensive Economic Partnership (RCEP), a China-backed investment and trade agreement is in the final stages of negotiation and will be concluded in 2019.
ASEAN nations, as well as China, South Korea, Japan, India, Australia, and New Zealand, hoped to reach an agreement related to the RCEP during the summit.
Singaporean’s Prime Minister also stated that the RCEP represents a modern, high quality, extensive, and mutually beneficial agreement. He also warned the respective nations that the deal could be at risk if negotiations are unnecessarily prolonged.
A statement from Beijing said that the talk regarding the China-backed investment and trade deal is at a ‘critical moment’.
The negotiations had advanced substantially during the meeting and will conclude next year. If the negotiations are prolonged, there is a risk that the agreement will lose support and credibility from the member countries. If this was to happen, the citizens and businesses of the respective nations would lose major opportunities.
Background of the RECP Deal
RECP envisions the establishment of a free-trade zone. The zone will cover nearly 45 percent of the total population, and about a third of the global GDP excluding the US.
Negotiations for the trade and investment deal among Asian nations started in 2012. China’s Premier Li Keqiang has stated that the meeting has come to an important phase and the momentum will likely continue until it is completed next year.
Asian nations were hard pressed for an alternative trade deal after the US backed off from the Trans-Pacific Partnership (TPP). During the summit in Singapore, the Asian nations were looking to make significant advances regarding the deal.
But any announcement during the ASEAN summit was unlikely since the member countries have not yet finalized a framework for access to services, goods, and investment in Asia.
The delay represents the challenge due to the diverse needs of the negotiating members. When concluded, it would be the largest free trade zone in the world negating the losses due to the increase in tariffs by the US.
India and Japan were among the countries that had some reservations about the deal. Japan asked for high standard e-commerce rules, while India feared that it would result in an influx of cheap imports.
An Indian official related to the Minister of Commerce stated that more progress should be made regarding the service sector that makes about 50 percent of most of the RCEP countries. The minister also stated that India supported the trade deal and hoped for an early conclusion to negotiations.