Asian mega free-trade deal stalls in Singapore despite China’s push against protectionism
- India’s reluctance to open up its markets among the stumbling blocks to agreement that would cover half the world’s population
China’s attempt to seal Asia’s biggest trade deal stalled at a regional summit in Singapore, despite Beijing’s efforts to counter American protectionism and the absence of US President Donald Trump.
After a fruitless meeting on Monday, trade ministers from Asean’s member countries and the bloc’s six dialogue partners – Australia, China, India, Japan, South Korea, and New Zealand – pushed back further talks on the Regional Comprehensive Economic Partnership (RCEP) until next year.
The RCEP is proposed free trade agreement covering the 16 countries and was originally expected to be completed by the end of this year. But stumbling blocks remain, including India’s reluctance to open up its markets, particularly to Chinese firms.
Leaders of the 16 countries are expected to agree to continue the talks when they meet on the sidelines of the summit for the Association of Southeast Asian Nations on Wednesday.
Addressing a business forum in the city state, Chinese Premier Li Keqiang said China hoped to conclude the RCEP negotiations next year, adding that the deal would cover half the world’s population and account for more than a third of its GDP.
“With the rise of protectionism and strains on free trade, we need to advance the RCEP negotiations and an agreement that is anchored on World Trade Organisation rules,” Li said.
“It’s going to deliver real benefits for the people of our region. It’s going to send a message to the international community that we stand by free trade and are determined to push it forward with concrete action.”
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Indian Commerce Minister Suresh Prabhu said the future “lies in RCEP”, but urged a caution and patience to ensure “every country will benefit from it”.
Among those attending Wednesday’s summit will be Russian President Vladimir Putin, Canadian Prime Minister Justin Trudeau, Indian Prime Minister Narendra Modi and Japanese Prime Minister Shinzo Abe. Trump will be represented by US Vice-President Mike Pence.
The RCEP has long been seen as a rival to the Trans-Pacific Partnership, now renamed the Comprehensive Progressive Trans-Pacific Partnership, a trade deal that was spearheaded by the United States until Trump withdrew American involvement last year.
China’s escalating trade war and geopolitical rivalry with the US has given it added impetus to conclude the RCEP talks, which began in 2013.
The US-China rivalry was at the forefront of the start of the Asean summit on Tuesday when Singaporean Prime Minister Lee Hsien Loong expressed concern about member countries being caught up in the tensions.
“These strategic trends of big power competition and shifts against multilateralism are pulling Asean member states in different directions,” Lee said.
“Despite this, Asean has shown that it’s still able to work together and find common ground.”
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Malaysian Prime Minister Mahathir Mohamad said the trade war between China and the US would trigger a “domino effect” that would affect trade relations.
‘[Those trade tensions] will be a reason for other developed countries to adopt protective measures against developing countries, including Asean countries,” he said. “This is not the time to close our doors, invoking trade protectionism measures”.
Analysts said future RCEP talks could be complicated by potential changes of government in some countries such as Australia, India, Indonesia and Thailand, where elections are due next year.
Simon Tay, chairman of the Singapore Institute of International Affairs, said: “Many of the problems do not lie within Asean’s control but relate to the relations between larger countries, like between India and China, which is subject to both trade and political considerations.”
