Asia-Pacific nations aim to eliminate 80% of import duties in 10 years


Trade ministers from 16 Asia Pacific countries agreed Monday to eliminate tariffs on 80 percent of their imports within a decade, in a major breakthrough in talks for a massive regional free trade deal.

The 10-member Association of Southeast Asian Nations (ASEAN) and China, Japan, South Korea, Australia, New Zealand and India, which have been negotiating for a trade pact known as the Regional Comprehensive Economic Partnership (RCEP) since May 2013, had been bogged down by the issue until now.

“The biggest issue we resolved today was agreement on modality in goods, meaning the level of tariff reduction,” Malaysian International Trade and Industry Minister Mustapa Mohamed said at a news conference at the end of the ministerial meeting.

“I consider this to be a major achievement,” he added.

The ministers agreed that upon being put into force, no duty will be imposed on 65 percent of tariff lines, and in 10 years it will be 80 percent.

“Details will be worked out in the next few weeks,” Mohamed said. “Our position now is for RCEP to be substantively concluded by the end of this year. There will be some technical issues which need to be resolved in 2016. We have to be realistic. Although the original plan was to complete everything perhaps by 2015, now we know that some issues might have to be carried forward. But those are minor issues.”

He said part of the problems faced in negotiations was that some countries involved do not have bilateral free trade agreements like Japan and China or China and India.

A meeting of the trade negotiating committee is scheduled for Oct. 12 to 16 in Busan, South Korea.

“(We) hope that by the time Busan comes in October, countries can exchange requests and offers,” Mustapa said. He said he expects an agreement can be reached by mid-2016.

The RCEP is touted as the world’s largest free trade deal as it will cover half the world’s population and, with a combined output that stood at $22.7 trillion in 2014, almost 30 percent of the global economy.

Last year, the total trade of RCEP economies reached $10.8 trillion while total foreign investment inflow hit $366.3 billion.

Efforts under RCEP have paralleled more high-profile free trade talks on the Trans-Pacific Partnership led by the United States.

The TPP is seen as crucial for the United States to counter China’s growing influence in the Asia-Pacific region, while RCEP is one of the key platforms for China to strengthen its trade ties with other nations.

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

  • Liars N. Fools

    I do not like it when the discussion of RCEP is always juxtaposed against TPP (I include an earlier posting of mine on JT below) and the issue framed as America vs. China. Sure RCEP might be a “lower standard” but it is far more inclusive and far cleaner a “free trade agreement” than the overly complex and corporate interest and diversion of trade away from China aspects of the TPP.

    Rather than having the America vs. China dicta at the end of the article, we should be encouraging greater, freer trade and investment among the RCEP countries, with the expectation that this will create another source of growth in the global economy. With what is happening on the global exchanges, we should certainly applaud these effort.

    My previous post:

    It is inaccurate to say that RCEP was proposed by China to oppose TPP. RCEP was proposed by ASEAN and is meant to join together its ten members and those nations with which ASEAN has or is pursuing free trade agreements (FTAs). It has “lower standards” according to TPP proponents but has far wider coverage because China, India, and Indonesia are in RCEP but excluded from TPP as are American treaty allies like Korea, Thailand, and the Philippines.

    I am not a supporter of TPP. It has problematic members in Asia like Vietnam, Malaysia, and Brunei. It is geared towards well connected corporate interests. Its IPR “strengthening” seems to be geared to make a lot of drug companies richer and drugs much costlier for those who need them. It does not really open the Japanese agricultural or automobile markets. It has complicated rules of origin provisions that will make some lawyers rich. It has a controversial investor state dispute settlement mechanism that could undermine domestic laws. Its environmental and labor standards are laughably low.

    That being said, TPP is not just about Asia. Five members are in the Americas: America, Mexico, Canada, Chile, and Peru. Two are in Oceania : Australia and New Zealand. The remainder are in Asia: Japan, Vietnam, Malaysia, Singapore, and Brunei. America has free trade agreements with at least six of these countries, and the most important non-FTA partner is Japan. If TPP is really about liberalizing trade, we would seek a FTA with Japan, a much more straight-forward if difficult negotiation.

    From a strategic point of view, it makes sense to link America to Asia, and in this sense, TPP is indeed an important concept. But the selling of this strategic concept on primarily free trade grounds is its weakness. There will be some big American winners, but largely, in economic terms, this will not be that much of a boost. To sell it as an anti-China move is also problematic because every single TPP member, America included, wants to maximize its economic involvement with China.