Bangkok, June 22 — Led by China — and excluding the United States — the sprawling Regional Comprehensive Economic Partnership (RCEP) is poised to become the biggest global trade deal, linking half the world’s people and marking Beijing’s dominance in Asian trade.
The long-awaited deal is expected to be discussed at the Association of Southeast Asian Nations’ leaders meeting this weekend in Bangkok.
What is RCEP?
Launched in 2012, RCEP is a trade pact between the 10-member Asean bloc, along with China, Japan, South Korea, Australia, New Zealand and India.
It links around 3.4 billion people and when signed will be the world’s biggest free trade pact. It is also expected to cover about a quarter of the world’s exports.
Its aim is to break down trade barriers and promote investment to help emerging economies catch up with the rest of the world.
Why does it matter?
It mainly matters because it doesn’t include the United States — and is notably being led by Beijing.
Observers say it will cement China’s domination over its backyard, where it faces little competition from America since President Donald Trump pulled out of a trade pact of its own.
That deal, called the Trans-Pacific Partnership (TPP), was on track to be the world’s biggest trade pact, until Washington pulled the rug out from under it, saying it funnelled off US jobs.
The US now says it is focusing on bilateral agreements with Asian nations, and insists it is not retreating from the region.
But with Washington and Beijing embroiled in a trade spat of their own, RCEP’s backers are hoping to finalize the deal soon.
The call comes even as a hollowed out version of the TPP moves ahead without the US, and the economic clout it brings.
What are the sticking points?
There are a few.
Australia and New Zealand are pushing for so-called high quality rules around labour and environmental protections.
Strengthening intellectual property terms is another issue.
And India fears the deal means its market will be flooded with Made-in-China goods that will hurt domestic manufacturers.
Pushing the deal through will largely come down to China and India, said a Southeast Asian diplomat.
“They are effectively negotiating a bilateral free trade agreement within RCEP, they are playing out their issues,” the diplomat told AFP, requesting anonymity.
So far, seven of the 18 RCEP chapters have been concluded, and Thailand is pushing to have the deal done this year.
Can it really be signed this year?
The Asean bloc is eager to conclude the deal this year.
But with negotiations grinding on since 2013, some analysts are doubtful it will be done before the end of the year.
Unless China and India see eye-to-eye, “RCEP is not going anywhere”, Michael Michalak, regional managing director of the US-Asean business council told AFP.
And fears are mounting the deal could fizzle out.
The Southeast Asian diplomat told AFP that if RCEP is not finalized this year, it will be “dead in the water” and China could push ahead with smaller trade deals with the Asean bloc.