Asia-Pacific countries committed to completion of the world’s largest FTA by 2019

Note: The following is an edited translation of a commentary from the Chinese-language "Commentaries on International Affairs."

Chinese Premier Li Keqiang poses for a group photo with leaders attending the 21st ASEAN Plus Three Summit in Singapore, on Nov. 15, 2018. [Photo:Xinhua]

One year after their first meeting in Manila, leaders from 16 Asia-Pacific countries, namely the ten ASEAN member countries, plus China, Japan, South Korea, India along with Australia and New Zealand, have decided at their second meeting in Singapore that they will seek a conclusion for the Regional Comprehensive Economic Partnership (RCEP) deal in 2019. This means the world’s largest free trade agreement hopefully may come into being next year. 

Chinese Premier Li Keqiang has said that substantial progress had been achieved in RCEP negotiations over the past year. Lee Hsien Loong, prime minister of Singapore, current chair of ASEAN, has said the negotiations have advanced to the final stage. 

Progress didn’t come easily. Since the negotiations started six years ago, the timetable set out for a final agreement has been pushed back several times, mainly due to the uneven levels of development and openness among RCEP countries. Developed economies such as Japan are hopeful that RCEP can adopt high standards, while some developing countries like India remain suspicious about opening up their domestic markets. 

After six years of development, the gaps among RCEP nations have been gradually reduced, which has helped reinforce those countries’ confidence in market opening-up and tariff cuts. India, for instance, has dramatically changed its stance from fearing imports to believing that it can benefit a lot from free trade as reported by the Times of India. RCEP countries are finally close to a deal.

The leaders of the 16 countries, however, decided to hold the final negotiations in 2019. They’ve had their own political concerns. In the first half of next year, India, Thailand, Indonesia, and Australia all have elections on their political agenda. It’s a wise move to schedule the final deal at a later date in case it triggers any controversy during the election campaigns, which might in turn cause a negative impact on any agreement.

The final stage of negotiations next year has great significance to the world at a time of rising unilateralism, anti-globalization sentiments and protectionism.

First of all, RCEP will potentially benefit approximately 3.5 billion people in the region, half of the global population. Upon its conclusion, the deal will create the world's largest free trade zone, with a combined GDP of 22.5 trillion US dollars. For this reason, the evolution of the final negotiations of the RCEP will help enhance the world’s confidence and positive expectations in relation to the global economy, send a clear signal to support multilateralism and free trade, as well as effectively promote regional economic growth and economic globalization.

Moreover, RCEP firmly expresses the will of developing countries. An analysis by the Brookings Institution in the United States has pointed out that RCEP is by far the most ambitious ever trade agreement negotiated by developing countries. “It will encompass the first-ever agreements among China, India, Japan and South Korea, building upon commitments in the World Trade Organization, and offer new evidence of Asian leadership in world trade,” notes the article.

In addition, RCEP will demonstrate the contribution of a united Asia to the global economy. The RCEP comprises the world’s second and third largest economies, China and Japan. It covers the most economically dynamic region in the world. If Asian countries are united in jointly safeguarding and promoting multilateralism and free trade, it will give great impetus to the global economy. In response, Japanese Prime Minister Shinzo Abe said that Asia must unite when faced with the rise of protectionism and Asia’s future depends on whether it can “keep hoisting the flagship principle of free and fair trade”.

Looking forward to the negotiations scheduled for next year, there are plenty of reasons to have full confidence that a deal will be reached. For Japan, if the deal is in place, it will give the country more bargaining power when Tokyo holds bilateral trade negotiations with Washington. And China, which has made promoting free trade and safeguarding a multilateral trading system a key responsibility, will also give full support to RCEP in fulfilling its role. And as for India, joining the world's largest free trade agreement will be far better than staying estranged.

Concerned about the prevalence of US trade protectionism, Asian economies have more reasons and incentives to push for an early agreement over the RCEP. Hopefully, in 2019, we can not only see the conclusion of the RCEP negotiations, but also witness the deal taking effect.