Political interference risks undermining Asia's growth potential

(经济)(2)内蒙古上海庙至山东临沂特高压输电工程加紧建设

(Xinhua file photo)

by Matt Burgess

SYDNEY, May 6 (Xinhua) — Negotiations for the 16-member Regional Comprehensive Economic Partnership (RCEP) have progressed further as trade and investment opportunities in the dynamic Asia Pacific region expend, though questions remain about its comprehensiveness.

Australian Minister for Trade and Investment, Steven Ciobo told Xinhua in a statement on Friday though RCEP negotiations are complex given the diversity of countries and issues involved, negotiations on market access and stronger trade-based rules have progressed.

“RCEP negotiators also engaged with business and other stakeholders across a broad range of issues, including non-tariff measures (NTMs), e-commerce, intellectual property and investor state dispute settlement,” Ciobo said.

The RCEP, encompassing the 10-member ASEAN plus China, South Korea, Japan, India, Australia and New Zealand, is scheduled to be completed by the end of this year, ensuring Asia meets its potential as the dynamic driver of global growth via deeper integration and structural reforms.

But an agreement can only be signed when the diverse region agrees to market access commitments that eliminate at least 95 percent of tariffs, removing unnecessary barriers to foreign investment and measures to constrain non-tariff trade restrictions.

Trade analysts predict the RCEP will not be as comprehensive as expected as regional trade blocks become politically charged following the failed Doha round of global trade negotiations that stumbled because complex issues could not be resolved.

“I can’t see some developing countries like Malaysia, Indonesia for instance to give up all their protectionism at the expense of free trade,” Director of the Institute of Global Finance at University of New South Wales Fariborz Moshirian told Xinhua.

“Similarly, countries like New Zealand and Australia will be sensitive about some sectors of the economy, and of course having Japan on side, Japan itself will have a hair roll when it comes to agriculture.”

In an ideal world these negotiations would progress in the World Trade Organisation (WTO) where decisions are economically, not politically, driven.

What also cannot be discounted is the influence of the United States which sees the RCEP as a treaty designed to offset the U.S.-led Trans Pacific Partnership (TPP). It is playing an important role in the outcome of the negotiations, Moshirian said.

“It might not be as simple as it looks,” he said.

U.S. President Barack Obama has been pushing for the U.S. Congress to approve the 12-member TPP, which includes Australia, New Zealand, Japan and Malaysia among others, in a bid to “call the shots” on trade with Asia.

“China is negotiating a trade deal that would carve up some of the fastest-growing markets in the world at our expense, putting American jobs, businesses and goods at risk,” Obama wrote in a Washington Post editorial on Monday.

A successful RCEP deal and China’s welcoming attitude toward the TPP have created the bedrock for a Free Trade Area of the Asia Pacific (FTAAP) which is in its preliminary stages at the Asia-Pacific Economic Ccoperation (APEC).

Should FTAAP progress further, geopolitical tensions should not be underestimated as APEC also incorporates Russia, Moshirian said.

“Russia will have great interest in trying to get at a deeper level to the Asia region, because Russia considers herself as both European and Asian.”

The 13th round of RCEP negotiations are scheduled for June 12-18 in Auckland, New Zealand.

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