Delays faced by Pacific trade deals show nations want quality, not speed

In Photo: (From left) Malaysian Prime Minister Najib Razak, Myanmar leader Aung San Suu Kyi, Thai Prime Minister Prayuth Chan-ocha, Vietnamese Prime Minister Nguyen Xuan Phuc, South Korean President Moon Jae-in, Japanese Prime Minister Shinzo Abe, Philippine President Duterte, Chinese Premier Li Keqiang, Singaporean Prime Minister Lee Hsien Loong, unidentified Laotian representing Lao PDR Prime Minister Thongloun Sisoulith, Cambodian Prime Minister Hun Sen and Indonesian President Joko Widodo pose for a group photo during the Asean Plus Three Commemorative Summit in the 31st Asean Summit on November 14.

After talks aimed at wrapping up a giant Pacific trade deal almost collapsed in acrimony in Vietnam last week, ministers are now warning that a rival Asian pact should also focus on  quality over speed.

That doesn’t mean the 16-nation Regional Comprehensive Economic Partnership (RCEP) won’t get done. But the fraught negotiations in Da Nang over the Trans-Pacific Partnership (TPP) showed that nations aren’t going to rush trade deals just to defend globalization against the rising protectionist mood since Donald J. Trump entered the White House.

The RCEP, which includes China and India but not the United States, is on the agenda for discussions at regional summits this week in Manila. Most officials acknowledge the deal will miss a year-end deadline, though they hope to have a framework agreement in early-2018.

Several RCEP nations are also in the TPP, which was reduced to 11 members when Trump withdrew the US on his first day in office, citing a perceived risk to US jobs. Moving ahead on the TPP since then has proven difficult, and talks were almost scuttled entirely in Vietnam after Canada refused to sign a framework agreement without changes, demanding a “high quality” outcome. 

After two days of wrangling, a framework agreement on the TPP was signed, but months of potentially painful work remain to get an actual deal. That preoccupation with finalizing the TPP has seen the focus shift from the RCEP. “The RCEP has been a priority after  the TPP almost collapsed without the US, but, in the last few months, there has been some pickup in momentum for TPP,” Malaysian Trade Minister Mustapa Mohamed said last week in an interview in Vietnam. “The RCEP was a priority when we knew that the TPP was not going anywhere.”

Differences remain on the RCEP, Mustapa added. “We have to have a good agreement. We can’t be pushing just for the sake of meeting deadlines,” he said. “We need to have quality.”

Both the RCEP and TPP have been tugged back and forth for years amid strategic jockeying between the US and China. President Xi Jinping attempted to accelerate RCEP talks after Trump’s election upended the TPP negotiations.

The deals take different approaches to integrating Asia-Pacific trade. The TPP goes beyond traditional trade issues to address intellectual property, labor rights and state-owned enterprises. It would have covered 40 percent of the global economy, if the US had stayed in.

While the RCEP focuses on tariffs on goods, it also extends to services, wading into the contentious issue of worker migration. And its biggest economies have disputes over history and territory—China and Japan, and China and India— that are hindering discussions.

The RCEP must also bridge the interests of mature, developed economies, such as Australia and Japan, with emerging markets like Cambodia and Lao PDR.

High ambition

Australian Trade Minister Steve Ciobo said in an interview in Vietnam that he was seeking a high-quality RCEP deal. “Concluding these deals is not about doing it as quickly as possible,” Ciobo said.

“I don’t think we’ll be able to conclude by the end of the year; I think we will move into next year,” he added. “But I think that also reflects a high level of ambition for RCEP, as well. We need to be pragmatic, but we still need to make sure we have as much as we can.”

Preeti Saran, India’s top diplomat for Asia, said the country remained committed to the RCEP, but wanted a “balanced” outcome.

Some ministers said momentum for the RCEP wasn’t slowing, even as they agreed the end-year deadline will slip.

“The RCEP is moving on just fine,” Philippine Trade Secretary Ramon M. Lopez said in an interview in Vietnam. “The actual signing, I think we can probably expect the year after next.”

Thai Commerce Minister Apiradi Tantraporn said ministers hoped to at least report some progress while in Manila.

“Of course we still have differences, in level of ambition for one thing, and we are working very hard,” she said in an interview in Vietnam. The parties want “to finalize it, hopefully, by the early part of next year, so we can go on and do the legal scrubbing,” she added.

China, for one, said the ongoing TPP negotiations wouldn’t be a factor for the RCEP.

“I don’t think the TPP negotiations will be a set back toward  RCEP,” Zhang Jun, an economic affairs official at China’s foreign ministry, said in a briefing in Vietnam last week. “There indeed are some challenges in the RCEP negotiations, but we have achieved steady progress over the years, and are confident about the future of RCEP negotiations.” 

Image Credits: AP

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Turning Points 2018