CPTPP to continue attracting more members, RCEP unlikely to be concluded this year, say experts

11/01/2019    123

The US and China are highly unlikely to join the line of economies keen to join the landmark Pacific Rim trade deal that recently entered into force, even though they stand to benefit from doing so, said a panel of trade experts and Asian diplomats on Thursday (Jan 10).

Nonetheless, the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will continue to attract interested entrants, even though the joining process may take time due to the high standards imposed on all members of the trade pact, they said.

Negotiations on the Asean-led Regional Comprehensive Economic Partnership (RCEP) are also unlikely to be concluded this year because of the sheer difficulty of reaching a consensus between such diverse countries, especially since it is election year for several of them, they predicted.

Speaking at an Asia Society Policy Institute discussion on the future of Asian trade, the panelists gave their outlook on who would be the next to join the CPTPP, the RCEP’s prospects, and how they would be affected by ongoing US-China trade tensions.

They included Singapore ambassador to the US Ashok Mirpuri, his Thai counterpart Virachai Plasai, Obama-era top trade negotiators Wendy Cutler and Michael Froman, and international trade professor Peter Petri of the Brandeis International Business School.

Mr Froman, who led the negotiations for the original Trans-Pacific Partnership which the US pulled out of when President Donald Trump took office, said that being left out of the deal disadvantaged American exporters, who are losing out to their competitors on market access.

And while the panelists noted that the US could rejoin the deal, it was highly unlikely to do so under the Trump administration.

Dr Petri said that while he was not expecting China to sign up to the CPTPP, the trade pact’s rules on intellectual property protection, the role of state-owned enterprises and data transfers were possible examples of how China could conform better to global norms - key sticking points in its ongoing trade dispute with the US.

“A commitment by China... would represent a strong signal to rest of the world that China is seriously committed to aligning its policies with global norms,” he said. Many of the CPTPP’s provisions also align with China’s stated goals of opening up its economy, making its innovative sector stronger, he added.

Mr Froman said there was a long way to go before China could live up to the high standards of the trade deal, but that more countries were likely to join the CPTPP, giving countries outside the pact like China an incentive to raise its own standards so it could eventually join.

CPTPP ministers will meet in Tokyo next week (Jan 19) to discuss possible new members. Interested countries include South Korea, Thailand, Indonesia and the UK, said panelists.

Said Mr Mirpuri: “People are putting up their hands. And we're quite ready to start accepting them but without lowering any standards...It is not an easy agreement to join.”

Trade tensions between the US and China have led to economic uncertainty that has affected not only Singapore but the region, he said: “When you have the world’s first and second largest economies at loggerheads, the rest of us suffer...the fact that our two largest trading partners have different opinions about (trade standards) creates a lot of uncertainty.”

But the statements coming out of the round of US-China trade talks this week were encouraging, he said: “We see some path forward.”

The ambassador said that while the idea of China joining the CPTPP was very attractive, there was a chance that the US would choose not to join as a result, leading to a fragmentation of the regional economy into US-tied and Chinese-tied economic spheres.

Singapore’s dream of an Asia Pacific-wide free trade area - which the TPP and RCEP were meant as stepping stones to - may not be achievable in the near term, he said: “I think we’re more at risk of fragmentation rather than integration. We want to avoid that.”

“If we have China in the CPTPP, I can anticipate the US saying this is not good enough for us anymore, we’re not going to join. How can we have both China and the US in a relationship that the whole area can benefit from?

“This is where we're optimistic that this week’s bilateral conversation...will give us some direction as to where the (US-China) relationship will fall over the next few years, and the rest of us will take dressing from that,” said Mr Mirpuri.

Source: The Straits Times