Asia-Pacific Summits Update: RCEP Talks in "Final Stage," Extending into 2019
A series of high-level summits in the Asia-Pacific region are getting underway this week, kicking off with the Association of Southeast Asian Nations (ASEAN) and concluding with the Asia-Pacific Economic Cooperation (APEC) leaders’ meetings. These events, among others, are being watched closely for news of possible advances in trade and investment agendas, including on the Regional Comprehensive Economic Partnership (RCEP) negotiations, which are now set to continue into 2019.
The ASEAN Summit this week in Singapore marks the final milestone of the city-state’s presidency of that coalition, with the chairmanship due to go to Thailand next. This year’s ASEAN meetings were convened under the tagline “Resilient and Innovative.”
The regional intergovernmental bloc ASEAN is made up of 10 Southeast Asian countries, whose combined GDP was worth US$2.8 trillion last year. Its members include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.
Among the milestones that have emerged from this week’s ASEAN Summit include the conclusion of negotiations for a long-awaited ASEAN Trade in Services Agreement (ATISA), which experts say completes a package of three core pillars aimed at improving the region’s economic and sectoral integration. The other two are the ASEAN Trade in Goods Agreement (ATIGA), amended in August, and the ASEAN Comprehensive Investment Agreement (ACIA).
The new services deal is linked to an existing framework accord on services, which was designed to help achieve “free flow of trade in services within the region,” according to the coalition’s website. The ATISA would aim to take this framework deal further, particularly given that the services sectors of individual ASEAN countries make up anywhere between one-third to three-quarters of each country’s gross domestic product.
Singaporean Minister for Trade and Industry Chan Sun Sing told the Business Mirror that the agreement will create “a more liberal, stable, and predictable environment for service suppliers of the ASEAN.” Also notable from the ASEAN Summit was the signature by ministers of an Agreement on Electronic Commerce, as well as the adoption of the ASEAN Digital Integration Framework.
Chan lauded the electronic commerce agreement as a “testament to ASEAN’s commitment to create a conducive environment for the growth of e-commerce through advancing trade rules in e-commerce and building up greater digital connectivity within the region.” Officials also discussed the bloc’s ability to adapt and engage with the rapidly changing digital landscape, as the value of ASEAN’s digital economy is expected to reach US$200 billion within the next six years, according to statistics cited by the Asia Media Centre.
Global trade dynamics in the background
Notably, US President Donald Trump did not attend the ASEAN Summit nor related meetings, and he will also not be going to the Asia-Pacific Economic Cooperation (APEC) Forum coming up in Papua New Guinea. Washington is instead being represented by US Vice President Mike Pence, who told reporters that “the US commitment to the Indo-Pacific is steadfast and enduring,” and referred specifically to the value of trade and investment.
He named among these priorities the support of trade and investment in the Asia-Pacific region, while also mentioning the recent conclusion of negotiations to amend the US’ trade accord with South Korea. He also referred to the planned modernisation and replacement of an existing trilateral accord, the North American Free Trade Agreement (NAFTA), with the US-Mexico-Canada Agreement (USMCA), which is pending signature and ratification.
He also referred to the potential start of negotiations for a “historic trade agreement with Japan,” given that the Office of the US Trade Representative has already notified Congress of its intent to pursue such talks. “These new trade deals will put American jobs and American workers first,” he wrote in The Washington Post last week.
However, the challenges facing the global trading system on multiple fronts, including persistent tensions between the US and China, were also referred to by regional leaders this week. Several also spoke about the need to address and lower these tensions before they cause lasting damage to those countries’ economies and others.
“China has opened its door to the world; we will never close it but open it even wider,” said Chinese Premier Li Keqiang this week, according to comments reported by the Straits Times. “I still hope we can hold talks based on mutual respect, balance, and mutual benefits to resolve the issue. There are no winners in a trade war,” he said this week at a separate event, prior to talks with ASEAN leaders, according to comments reported by Reuters.
Other officials echoed this sentiment, with Chan telling the Associated Press that forums such as ASEAN should “continue to stay open and connected and leverage our collective strength to navigate disruptive trends and anchor our relevance to the global economy."
Negotiating agenda: RCEP talks to continue into 2019
Leaders from the Regional Comprehensive Economic Partnership also met this week, issuing a statement confirming that the planned mega-regional accord will not be completed this year, despite earlier hopes that they could endorse a “package” of agreed outcomes in 2018.
The accord would group the 10 countries of ASEAN together with Australia, China, India, Japan, New Zealand, and South Korea. Heading into the East Asia Summit (EAS), also held this week, some leaders from the RCEP group had already hinted that a conclusion to the talks was not yet possible.
For example, Australian Prime Minister Scott Morrison recently indicated that leaders’ objectives this week would be “to review progress towards the Regional Comprehensive Economic Partnership,” while noting the value of such an accord for fostering “closer regional economic integration.”
A joint leaders’ statement issued on 14 November indicated that the RCEP talks “have advanced to the final stage of the negotiations,” and expressed their commitment “to conclude a modern, comprehensive, high quality, and mutually beneficial RCEP in 2019.”
They also referred to the conclusion of seven chapters out of the overall accord. They named these as the chapters “on economic and technical cooperation, small and medium-sized enterprises, customs procedures and trade facilitation, government procurement, institutional provisions, sanitary and phytosanitary measures, and standards, technical regulations, and conformity assessment procedures.”
The leaders’ statement also included a brief, one-page annex on the negotiating state of play, referring also to the need for “[closing] remaining gaps” on market access.
“Special consideration may need to be given to the fact that not all RPCs have in place bilateral free trade agreements among themselves, without undermining the potential expansion and deepening of regional supply chains among the 16 RPCs,” the annex says, with the term RPC referring to RCEP Participating Countries.
The RCEP talks have been underway for six years, and the efforts to conclude the deal come as some of its participants are gearing up for the entry into force of another regional accord: the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The CPTPP was recently ratified by six signatories, which is the minimum for the accord to take effect by the end of the year. It has a partial overlap in membership with the RCEP, though its structure and approach is notably different. Both are being considered as possible pathways for advancing regional integration on a wider scale in the future, potentially in the form of an even bigger trade accord. (See Bridges Weekly, 25 October 2018 and 1 November 2018)
Coming up on the regional trade calendar
The next major gathering on the regional trade docket is a leaders’ level meeting of the Asia-Pacific Economic Cooperation (APEC) economies, being held in Port Moresby, Papua New Guinea.
Papua New Guinea is the smallest member of APEC, a regional coalition made up of 21 economies, which have varying sizes, populations, and economic structures.
Senior officials have already met, with economic ministers gathering on Thursday 15 November and leaders getting together over the weekend. The APEC summit this year has as its theme “Harnessing Inclusive Opportunities, Embracing the Digital Future,” and this year’s hosts say that trade and cooperation will be headlining the agenda.
ICTSD reporting; “Asean concludes accord on services,” BUSINESS MIRROR, 14 November 2018; “ASEAN signs first agreement on e-Commerce,” UNTV, 12 November 2018; “Events: East Asia Summit, APEC Summit, ASEAN Summit,” ASIA MEDIA CENTRE, 8 November 2018; “Mike Pence: The United States seeks collaboration, not control, in the Indo-Pacific,” THE WASHINGTON POST, 9 November 2018; “China calls for open world economy but work remains on landmark trade pact,” REUTERS, 12 November 2018; “ASEAN summit puts focus on trade tensions, trends,” THE ASSOCIATED PRESS, 13 November 2018; “United States and China trade tensions will trigger a ‘domino effect’ says Indonesian PM,” REUTERS, 13 November 2018.