RCEP Ministers Remain Optimistic Despite Negotiation Hurdles
NAYPYIDAW – On Wednesday, the Association of Southeast Asian Nations (ASEAN) and its FTA partners – Japan, New Zealand, China, India, South Korea and Australia – held their second round of ministerial talks for the Regional Comprehensive Economic Partnership (RCEP).
The proposed megatrading bloc, launched in November 2012, would consolidate all existing ASEAN FTA’s into a single comprehensive agreement covering three billion people and 30 percent of the world’s GDP (about US$21 trillion). Intended for completion by December 2015, RCEP would form a powerful channel for future trade and investment integration in Asia.
Delegates at the meeting, held in Myanmar, faced significant opposition from China and India, both cautious of high-level trade liberalization. Subsequently, although ministers agreed on the necessity of lowering tariffs, an agreement on the actual extent of the tariff reductions could not be reached.
In the face of concerns that RCEP might not meet its completion target next year, ministers remained optimistic, stating that they were “encouraged by the progress made after five rounds of negotiations since its launch in November 2012” and that they are still committed to concluding negotiations by December 2015.
Tariffs (and non-tariff barriers) still remain a potential hurdle to unlocking freer trade in ASEAN and accompanying growth in foreign investment inflows. But to truly reach such heights, the deeply diverse group of countries must first strengthen its regional integration and cooperation, warns dean of the Lee Kuan Yew School of Public Policy and Asia expert Kishore Mahbubani.
As one such step, the significantly deepened intra- (and extra-) regional trade facilitated by RCEP holds important potential for ASEAN and foreign investors alike—not just because it would create one of the largest FTAs in the world.
The sixth round of RCEP negotiations is to be held in India at the end of December.
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