Talking trade

Obstacles such as a lack of consensus in India around the pace of legal market liberalization may hinder plans for integration under the regional comprehensive economic partnership, writes Andrew Godwin

The withdrawal of the US from the Trans-Pacific Partnership (TPP) appears to have killed the huge trade agreement that would have come into effect among the following countries representing 40% of the world’s economy: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam. Some countries, such as Australia and Japan, have expressed the hope that talks on the agreement will be revived among the remaining members or that the US will support the initiative in a revamped form – a hope that has faded in the wake of comments by the US president that his country will focus its attention on bilateral trade agreements instead.

One of the consequences of the US withdrawal from the TPP is that certain countries in the Asia-Pacific region are pinning greater hopes on the proposed mega-regional trade agreement known as the Regional Comprehensive Economic Partnership (RCEP). Indeed, India has been buoyed by the US withdrawal from the TPP as a result of concerns that the TPP would have had a negative impact on sectors such as apparel and pharmaceuticals and would have made its exports less competitive.

THE RCEP – WHO, WHAT AND WHY

The RCEP is currently being negotiated by the 10 member states of the Association of Southeast Asian Nations (ASEAN) – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam – and the six states with which ASEAN has existing free trade agreements: Australia, China, India, Japan, New Zealand and South Korea. The RCEP is expected to have profound geopolitical implications in addition to the potential that it offers for the promotion of trade liberalization in Asia.

The RCEP covers a broad range of areas, including goods, services, investments, economic and technical cooperation, competition and intellectual property rights. As is the case with all multilateral trade agreements, however, negotiations concerning the RCEP have become bogged down with various sticking points and concerns. India, for example, has been particularly concerned about tariff reductions on goods and the flood of cheap imports that this would trigger from countries such as China. Although dropping its earlier call for a three-tiered system of tariff reductions that would have applied separate rates of reduction to imports from different countries, India is still insisting that deviations be allowed for certain countries.