Business / Economy

RCEP ministers make 'big progress' at Bangkok talks but likely to give up on trying to seal free trade pact by yearend

Kyodo

Bangkok

KYODO

Leaders from 16 Asia-Pacific nations, including Japan, China and India, are likely to declare early next week their intention to give up achieving their goal of finalizing a free trade deal by the end of this year, a source close to the matter said Saturday.

But the leaders of the Regional Comprehensive Economic Partnership are expected to commit to signing an agreement on creating the world’s largest free trade area in 2020 in a joint statement to be released after their scheduled summit Monday in Bangkok, the source said.

Most of the negotiations regarding RCEP have been completed, and the few outstanding bilateral issues will be resolved by February, the source added.

The 16 countries have recently been trying to clinch an agreement by the end of this year. Although they will miss that deadline, optimism has been growing that the mega free trade deal will become a reality sometime soon.

While RCEP members have concluded text-based negotiations for all 20 chapters, one member nation is withholding agreement on the resolution, the source said. That country is believed to be India, which has apparently yet to agree on key fields including tariffs.

Some diplomatic sources have voiced fears that India could withdraw from the RCEP framework altogether if negotiations do not move forward.

On Friday, a Thai negotiator suggested that RCEP ministers had failed to reach an agreement on the free trade pact at their meeting in Bangkok the same day, but some were still optimistic about striking a deal before the summit.

A senior Japanese government official told reporters in Bangkok that RCEP leaders will release a “joint statement” after Monday’s summit, although he provided no details.

According to a high-ranking official familiar with Friday’s dialogue in the Thai capital, the ministers made “big progress.”

India has been reluctant to lower its trade barriers, as the country has suffered massive and chronic trade deficits with China for many years, Japanese government sources said.

If the free trade area — which would cover half of the world’s population — is put into practice, trade and investment activities among RCEP nations would intensify on the back of measures like the elimination and reduction of tariffs.

In India, however, there is concern that the deal would result in an influx of cheap products including smartphones from China, further increasing the trade surplus of the world’s second-biggest economy, the sources said.

China has been eager to conclude the RCEP as soon as possible, as its economy has been slowing down against the backdrop of a tit-for-tat trade war with the United States, the sources said.

Beijing also sees RCEP as an important step to achieve President Xi Jinping’s Belt and Road initiative for the development of infrastructure and trade across Asia, Europe and Africa — touted as a modern Silk Road economic zone.

The RCEP, covering a third of the global economy, has repeatedly missed deadlines amid the differing ambitions of its members, which include the Association of Southeast Asian Nations. The talks were launched in 2013 and the initial goal was to wrap them up in 2015.

New trade minister Hiroshi Kajiyama skipped the ministerial meeting on the Asia-wide free trade deal to attend Diet deliberations at home.

Kajiyama has decided to focus on domestic matters after his predecessor abruptly resigned on Oct. 25 over a money and gift scandal. Hideki Makihara, the state minister for trade, took part in the gathering in place of Kajiyama on Friday.

Prime Minister Shinzo Abe will make a three-day trip from Sunday to attend a series of summits related to the ASEAN, including one to negotiate the RCEP.

In Bangkok, Abe will take part in a summit with leaders of five Southeast Asian countries along the Mekong River — Cambodia, Laos, Myanmar, Thailand and Vietnam.

On Monday, Abe is expected to attend a leaders’ meeting for RCEP, which brings together Australia, China, India, Japan, South Korea and New Zealand, as well as the 10 ASEAN countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

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