OSAKA – With the demise of the U.S.-led Trans-Pacific Partnership agreement, attention in the Asia-Pacific region has turned to Kobe, where representatives from 16 countries gather Monday for the next round of negotiations on the Regional Comprehensive Economic Partnership (RCEP).
The five-day Kobe meeting marks the first time RCEP negotiators have met since Donald Trump became U.S. president and pulled America out of the TPP. It comes as RCEP supporters grow more hopeful that the TPP’s failure is an opportunity to make RCEP the fundamental Asia-Pacific trade agreement for the 21st century, even as divisions over issues ranging from tariff reductions and migrant rights to buying locally and intellectual property protection has leaders cautioning that a deal by the end of this year won’t be easy.
In addition, RCEP’s opponents warn it could further widen the economic gap between wealthier and less-developed members and even lead to a regional health crisis by strengthening rules for pharmaceutical companies that restrict the ability of people to access cheaper generic drugs.
RCEP has been, to date, an Association of Southeast Asian Nations-led process. Members include the 10 ASEAN nations of Brunei, Cambodia, Laos, Malaysia, Myanmar, Indonesia, The Philippines, Singapore, Thailand, Vietnam, as well as six other Asia-Pacific nations — Australia, New Zealand, South Korea, Japan, China and India.
Launched in 2012, the first round of negotiations took place in 2013, just as the TPP talks were moving forward. Seven RCEP members (Australia, Brunei, Japan, Malaysia, New Zealand, Singapore and Vietnam) were also involved with the TPP.
In several countries, especially Japan, the TPP received priority over RCEP amid the view that the TPP, which included the U.S. but excluded China and India, could complement RCEP, which includes China and India but excludes the U.S.
The trade ministry said Wednesday that the Kobe meeting, the 17th round of negotiations, would focus on trade in goods and services, rules of origin, investment, intellectual property and e-commerce.
“The demise of TPP has certainly enhanced the regional and global attention on RCEP (and) has helped RCEP’s chances of reaching an agreement by the end of the year,” said Amy King, a senior lecturer at the Australian National University’s Strategic and Defence Studies Center at the Coral Bell School of Asia Pacific Affairs. “The growing strand of protectionism in the United States and Europe has increased the pressure on East Asian economies to be a positive force in support of open economies,” she added.
But there are several fundamental issues of contention that must be overcome before an agreement can be reached.
With the TPP now dead, the wealthier members of RCEP want a TPP-like agreement that provides strong rules regarding issues such as intellectual property rights, especially for the pharmaceutical industry.
Access to cheaper generic drugs is a major issue for many ASEAN nations as well as India. But countries such as Japan and South Korea prefer stronger rules that protect the patent rights and profits of major drug companies.
Much of the opposition to RCEP in the Asia-Pacific region has to do with fears it will become an agreement that will lengthen patent terms, making it difficult and more expensive to produce cheaper drugs.
“RCEP could be the new benchmark for ‘worst-ever trade agreement for access to medicines,’ ” Loon Gangte, coordinator of International Treatment Preparedness Coalition South Asia, said in a December press release from Doctors Without Borders.
Other issues of contention between members include freedom to move across borders and how to deal with questions about buying locally, hiring locally, and what rights RCEP governments and RCEP investors should have when considering both.
Perhaps the biggest question mark hanging over the Kobe conference, however, is whether China will flex its muscles and push harder to get an agreement done.
ASEAN leaders reject the notion that RCEP is “China-led,” and most call for a consensus-style agreement that falls short of the kind of strict rules that developed nations such as Japan, Australia, and New Zealand prefer.
Japan’s role in the RCEP and its efforts in Kobe will be especially watched by a Japanese business community that remains shocked by Trump’s decision to quit the TPP.