RCEP talks should focus on early harvest
Updated: 2014-05-13 07:31
By Ouyang wei and Xia Fan (China Daily)
The fifth round of Regional Comprehensive Economic Partnership talks are set to commence in Singapore in June, barely two months after the conclusion of the fourth round, a sign that the efforts of 16 Asian countries to create the world's biggest free trade area are gaining momentum. Measures to overcome the challenges in the follow-up negotiations were high on the agenda at the 24th summit of the leaders of the Association of Southeast Asian Nations, and related meetings, which concluded on Sunday.
Comprising the 10 ASEAN member nations as well as China, South Korea, Japan, India, Australia and New Zealand, the RCEP aims to integrate all of ASEAN's existing free-trade agreements into one. Should it be realized it will account for over 30 percent of the world's gross domestic product and cover about 45 percent of the global population. Although intra-regional trade in Asia has almost tripled, to some $3 trillion, over the last decade, it is still lagging behind when compared to the European Union.
Chinese Premier Li Keqiang said at this year's Bo'ao Forum for Asia annual conference that regional economic integration meets the interests of all Asian countries. "We need to work in unison to promote trade liberalization and investment facilitation, and upgrade regional and sub-regional cooperation," Li said, adding China will work with all other parties to accelerate the RCEP negotiating process.
The RCEP was first proposed by ASEAN as the regional grouping struggled to entrench its centrality in promoting cooperation with East Asian nations at a time when the United States-led Trans-Pacific Partnership was gearing up. The TPP requires much deeper economic liberalization from its members and contains provisions to protect labor rights, the environment and intellectual property rights, the reform of State-owned enterprises and will boldly eliminate tariffs. By contrast, the RCEP appears to be more inclusive and flexible as it was designed to cater to the diverse circumstances and development gaps that exist within ASEAN and between ASEAN and its FTA partners. This makes it more attractive to less-developed countries and ensures wider membership.
It is anticipated the RCEP will promote income gains of approximately $644 billion by 2025, or 0.6 percent of the world's GDP, according to a study by the Asian Development Bank. The RCEP talks are scheduled for completion in 2015 when agreements will be finalized before being implemented in the following years.
Since the first round of talks was held in Brunei in May 2013, there have been four rounds of negotiations in all. In the first three rounds of talks, participating countries reached preliminary consensuses in the areas of tariff concessions, rules of origin, customs procedures and trade facilitation, among others. In the latest round of negotiations, progress was made on a range of issues including goods, services, investment and the agreement framework. Nonetheless, Chinese delegation leader Wang Shouwen, assistant minister of the Ministry of Commerce, said the RCEP negotiations remain a daunting task due to the different development levels and varied stances among the participating countries.
The social and economic development gulf is huge among RCEP countries, with the GDP of the most developed one, Japan, being over 300 times more than that of the least developed ones, say, Myanmar. Meanwhile, each of the RCEP countries has its own sensitive areas that are vulnerable to the competition expected to be brought about by the RCEP, such as the manufacturing industry in India and the farming sector in Japan.
Accordingly, each country will inevitably seek maximum protection for their own vulnerable sectors in the negotiations, thus making the process more difficult.
Furthermore, the RCEP is mainly based on bilateral FTAs among the participating countries. In the absence of some important FTAs, the RCEP negotiations will not make a breakthrough any time soon. Although ASEAN has already signed FTAs with the other six countries, some of them have yet to clinch deals among themselves, including those between Japan and South Korea, China and Japan, India and New Zealand, and China and India.
The RCEP, rather than a blanket agreement, should be a phased-in arrangement that accommodates member countries at different levels of development. While catering to the differences among the 16 countries and providing special policies for the least developed members of ASEAN, the RCEP negotiations could focus on those areas where a consensus can be reached more easily - similar to the "Early Harvest Program" of the ASEAN-China FTA - so that participating countries can enjoy the benefits as early as possible and will be willing to promote follow-up deals.
The authors are writers with Xinhua News Agency.