Asia-Pacific Leaders Announce Major Regional Trade Talks
Leaders from various Asia-Pacific nations gathering in Phnom Penh, Cambodia earlier this week formally announced the launch of negotiations for a 16-country deal which - when completed - would form one of the world's largest trade pacts. Separate efforts to initiate talks for a possible trilateral trade agreement between China, Japan, and South Korea also moved forward this week, despite earlier concerns that brewing tensions over disputed islands would stall the initiative.
Regional partnership talks to begin in 2013
At the end of the East Asia Summit on Tuesday, leaders from the Association of Southeast Asian Nations (ASEAN) - as well as Australia, China, India, Japan, New Zealand, and South Korea - formally announced that they would be beginning negotiations next year for a Regional Comprehensive Economic Partnership (RCEP).
The ten ASEAN countries are Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
The proposed deal, leaders said in their joint declaration, would be a "modern, comprehensive, high-quality, and mutually beneficial economic partnership agreement establishing an open trade and investment environment in the region." Formal negotiations would begin in early 2013, they said, with the goal of finishing the talks by the end of 2015.
According to the RCEP guiding principles and objectives - which were outlined in August by the participating countries' economic ministers - the proposed pact would cover trade in goods and services, investment, intellectual property, economic and technical cooperation, and dispute settlement, among other topics.
Plans for the RCEP date back to last November's ASEAN Summit, where leaders of the group's member states adopted the ASEAN Framework for Regional Comprehensive Economic Partnership.
Along with the announcement of the RCEP launch this week came the news that another regional integration effort - the kick-off of the ASEAN Economic Community, which would serve as a unified market for the ten ASEAN countries - will be delayed by almost a year, until December 2015, to allow member economies more time to dismantle remaining trade and investment barriers and address other outstanding issues.
TPP versus RCEP?
Some of the countries set to engage in the RCEP talks are also participating in negotiations for another high-profile Asia-Pacific deal, the Trans-Pacific Partnership (TPP) Agreement - specifically Australia, Brunei, New Zealand, Vietnam, and Singapore.
The TPP also includes the US, Canada, Chile, Mexico, Malaysia, and Peru.
Thailand - which is also part of the RCEP group - announced earlier this week that it plans to seek entry to the TPP negotiations, while Japanese Prime Minister Yoshihiko Noda has recently said that he is also planning to pursue a seat at the table in the 11-country talks should he win re-election in December. (See Bridges Weekly, 14 November 2012)
With US President Barack Obama in attendance at the East Asia Summit, TPP leaders met on the event sidelines to discuss progress in their own trade talks. (For more on the TPP leaders' meeting, see related article, this issue.)
While observers have speculated that the proposed TPP agreement is Washington's attempt to contain Beijing, US officials have lately stressed that they are open to China joining the 11-country negotiations, and reiterated that the proposed "21st century agreement" is meant to serve as a platform for a wider Asia-Pacific deal.
"We welcome the interest of any nation willing to meet 21st century standards as embodied in the TPP, including China," US Secretary of State Hillary Clinton said in Singapore last week. "And we are offering to assist with capacity building, so that every country in ASEAN can eventually join."
However, analysts have noted that balancing the negotiations for the two proposed deals could pose difficulties for countries aiming to participate in both, a concern that some officials sought to dispel in their comments following the Cambodia meet.
"The Regional Comprehensive Economic Partnership agreement is one that is ASEAN-lead, which is just at the starting point," Australian Prime Minister Julia Gillard said in response to questions over how Australia would juggle its involvement in both the proposed TPP and RCEP. "But of course we have done a lot of good work with ASEAN nations on freer trade and getting economic integration in our region. So from our perspective it makes sense to be involved in both [the TPP and RCEP] and to be maximising our efforts in both."
"We now look like we're going to have two pathways to the one destination, a Free Trade Area of Asia and the Pacific," Australian Trade Minister Craig Emerson told reporters this week. "This is very heartening and if one set of negotiations lends momentum to the other set of negotiations, that is all good and that is entirely possible."
Continued fears of global economic slowdown
The news comes amid concerns not only of the feared US "fiscal cliff" and continued struggles in the eurozone, but also reports of slowing growth in China and other emerging economies, and the fear that any setbacks in the advanced economies could well spread to their developing country trading partners.
"With the region accounting for more than half of the global market and about a third of the global economic output, there is no doubt that a successful RCEP would significantly contribute and boost global trade and investment," ASEAN Secretary-General Surin Pitsuwan said yesterday.
"The slowdown itself is not the main story," International Monetary Fund (IMF) Managing Director Christine Lagarde said last Wednesday at a separate meeting in Kuala Lumpur, while discussing the importance of increased trade and financial integration in Asia.
"The main story is that the slowdown is spreading to regions that have previously held up well. This is what worries me the most. In this interconnected world, there is really nowhere to hide," she continued.
Tokyo, Beijing, Seoul move forward on launch of trilateral talks, despite island disputes
The growing tension between Beijing and Tokyo in the weeks leading up to the summit over a group of contested islands in the East China Sea - known as Diaoyu in China and Senkaku in Japan - had recently sparked concerns over how much the territorial row would affect economic ties between the two regional powerhouses. (See Bridges Weekly, 7 November 2012)
In particular, questions had been raised over whether the two countries - whose trade relationship is valued at over US$340 billion annually - would be able to launch, together with South Korea, negotiations for a trilateral trade pact after having announced their intention to do so earlier this year. (See Bridges Weekly, 16 May 2012) Tokyo and Seoul are also embroiled in a territorial dispute of their own over a different set of islands.
Despite these maritime issues, however, the three Asian economies ultimately agreed on Tuesday that they would indeed begin negotiations for a trilateral trade deal early next year.
ICTSD reporting; "Asia-Pacific to launch talks on giant free trade zone," AGENCE FRANCE PRESSE, 18 November 2012; "Asian Economies Aim for Trade Deal as Sea Dispute Set Aside," BLOOMBERG BUSINESSWEEK, 19 November 2012; "Trade issues delay launch of ASEAN Economic Community," THE AUSTRALIAN, 19 November 2012.