Even as the trade ministers of 16 countries met on July 1, 2018 for yet another round of trade talks in Tokyo and are already preparing to meet again in two weeks’ time in Bangkok, the writing on the wall is clear! Five years of negotiations among the China-led 16 country grouping is not merely about trade. It’s also geo-strategic and the bigger the country the greater it’s influence and leverage!
The Regional Comprehensive Economic Partnership (RCEP), comprising ASEAN plus six other regional states: China, Japan, Korea, Australia, New Zealand, and India, endeavours’ to create a free trade zone comprising of almost half the world’s population and 30 % of global trade by value, with a year-end target for a comprehensive consensus on the deal.
Surely, it’s more than a deal about trade for China. Evidently, China seeks conduits for its goods to flow through its Belt and Road Initiated Infrastructure. Critics say that China has been the key driver for furthering this pact in the response to the ‘fast track’ status that was given to Trans Pacific Partnership (TPP) by Barack Obama. When the Obama administration proposed the TPP, the logic was again based on gaining strategic influence in global matters: Evidently, ‘If the United States did not write the rules on trade, China would.’
The fact that Trump walked out of the TPP, there is a new urgency for China to see RCEP through. The geo-strategic logic is the one that looms large. China’s Belt and Road Initiative, with an investment of more than USD 200 billion and counting, embraced by more than 65 countries is all about strategic influence via its vast network of roads, railways and ports.
It’s not only about China seeking influence. The Abe government in Tokyo is already advocating its own “Free and Open Indo-Pacific Strategy” as announced in August 2016. Inevitably, the plan includes both trade and investment for high quality infrastructure, extending it across the Asian region to India. Japan has already pledged $110 billion for that effort in February this year.
India, for its part, has organised several summit level meetings to celebrate twenty-five of its dialogue partnership with ASEAN, with the highlight being the presence of all the leaders of the ten ASEAN countries at it’s Republic Day celebrations in January this year. Modi Government’s ‘Act East’ policy compels it to demonstrate its willingness to join the pact despite the fact that it already has in place free trade agreements with ASEAN, Japan and South Korea and is negotiating similar pacts with Australia and New Zealand. India also has several major reservations on RCEP.
South Korea, Australia and New Zealand view the RCEP as a lever to galvanise their relations with ASEAN countries.
To shift the attention from itself to ASEAN, China is stressing on ASEAN’s core role and centrality in concluding the deal. This was evident when the Foreign Ministry spokesman Hua Chunying in January this year, said that China “firmly supports ASEAN’s core-leading role” in the negotiations, and that it was willing to strengthen communication and cooperation to conclude negotiations as soon as possible. Within ASEAN, concluding the deal appears challenging by 2018 and even more challenging in 2019. While Laos has some reservations on free trade, there’s a new government in Malaysia with re-thinking on China’s ambitions, Thailand’s junta is preparing for elections early next year and Indonesia’s presidential election is scheduled for April 2019.
Singapore, however, as the Chair of ASEAN and host to the 22nd round of RCEP negotiations continues to hope that during its tenure it would be able to facilitate a ‘historic’ breakthrough.
Disagreements on issues from as basic as defining free trade to data management and the movement of professionals continue to require frequent engagement among the negotiators. In fact, after 5 years and 22 rounds of negotiations, RCEP members have achieved a consensus on just two of the agreement’s 18 sections.
In such a scenario, can the RCEP be then signed in the next six months, merely to signal to the world that this China-led deal holds the promise for an Asia-Pacific integration in the longer term? For sure, No deal is better than a deal gone sour!
(The views expressed here are personal)
*Dr. Reena Marwah, ICSSR Senior fellow, presently based at the Centre for the Study of Developing Societies, India.