Asean and partners agree to step up efforts to clinch the world's largest trade deal

Foreign Minister Vivian Balakrishnan (centre) delivers his opening remarks at the 8th East Asia Summit Foreign Ministers’ Meeting, during the 51st Association of Southeast Asian Nations Ministerial Meeting in Singapore on Aug 4, 2018.
Foreign Minister Vivian Balakrishnan (centre) delivers his opening remarks at the 8th East Asia Summit Foreign Ministers’ Meeting, during the 51st Association of Southeast Asian Nations Ministerial Meeting in Singapore on Aug 4, 2018.PHOTO: AFP

SINGAPORE - Amid anxiety over a trade war, all 10 Asean nations and their key partners this week agreed to redouble efforts to conclude a region-wide trade pact by the end of the year.

The 16-country Regional Comprehensive Economic Partnership (RCEP) would, if concluded, be the world's largest free trade deal.

"All 10 Asean countries and our external partners acknowledge that a multilateral, rules-based trading system, which has underpinned our progress and peace for the past 70 years is under pressure, but, in fact, we need to double down on this principle," said Foreign Minister Vivian Balakrishnan at the end of a week of Asean-led meetings of foreign ministers.

On-going trade tensions between the US and several of its key trading partners, including China, loomed large at this week's annual meetings, traditionally dominated by security concerns.

Dr Balakrishnan said Asean must continue working with other like-minded partners to strengthen the web of interconnections and interdependence of trade and economies.

The conclusion of the RCEP will show political will, and "the acknowledgement that this is something we need to settle all the more given the anxiety over trade wars."

The shadow of brewing trade wars hung over the marathon series of discussions this week, prompting leaders to speak out against protectionism and tit-for-tat tariffs.

 
 
 

Malaysia's Foreign Minister Saifuddin Abdullah told reporters that a trade war was a "real threat" and the subject of concern among many countries.

Dr Balakrishnan said Singapore has "in its usual way, courteously but directly" expressed its position to China and the US, both countries the city-state has good relations with.

Trade wars - or any unilateral sanctions - will have a disproportionate impact on Singapore, whose global trade is three times its GDP.

"We've also stated that we believe in a multilateral, rules-based system," said Dr Balakrishnan.

"The position that Singapore takes is entirely consistent with all of our Asean members," he added.

The 51-year-old regional grouping has recognised that if it can't stop trade wars externally, it can for a start try to enhance intra-Asean trade, he said.

The days when Asean was just an exporter of spices, raw materials and components, were over.

"We are transiting into a new age where there will be a rising middle class in Asean and Asean will be a consumer in its own right. So there's certainly scope for increasing intra-Asean trade," said Dr Balakrishnan, noting that the concept for the Asean Economic Community has become all the more salient.

"We can't stop what happens outside, but we can prepare ourselves."

In response to a question on whether Asean would end up as an arena for big power rivalry, Dr Balakrishnan said: "We will be united. We will be relevant. We will maintain centrality, and we will continue to convene these regional and extra-regional platforms".

"Rather than looking at this as a competitive situation where we all just become proxies, our concept of being united, being central, open and inclusive, and welcoming investments and trade with all parties is precisely the right response. And this is what we have communicated unequivocally to all our external partners, including the superpowers."

The East Asia Summit ministerial meeting and Asean Regional Forum retreat saw agreement on the need to work together on emerging issues like cyber-security, and many calls for the complete, verifiable and irreversible denuclearisation of North Korea - and for this to be achieved in a peaceful way.

There were some very frank discussions, especially at the Asean Regional Forum, which was also attended by the US, North Korea and South Korea, said Dr Balakrishnan who noted that the joint agreement signed at the Singapore summit in June was an important first step in a long journey.

"There are major issues that they need to resolve. I am glad that the discussions could take place. Very candid… brutally frank," he said. "But nevertheless people acknowledged that there has been some progress and that the summit in Singapore did change the tone of the conversation, and hopefully will help set the stage for the peaceful resolution of the outstanding issues."

Progress has also been made on efforts to defuse tensions in the South China Sea, with Dr Balakrishnan announcing on Thursday that Asean and China had agreed on a single text to negotiate the Code of Conduct (COC), which will form the basis for future negotiations.

This was not yet the complete solution, but was a significant milestone that would help build confidence, he said. This continuing engagement would lower tension, and encourage all claimant states to seek a solution.

"The fact that we announced the single draft of the COC draft negotiation text made a big difference to the tone of the discussion this time, compared to previous Asean meetings," said Dr Balakrishnan.

Turning to the crisis in Myanmar's Rakhine state, he noted that no refugees have been returned officially through the arrangements between Myanmar and Bangladesh, "so clearly there's still work that needs to be done on the ground and at the negotiating tables".

While Asean stands in support of negotiations, it has been and will continue to provide humanitarian support for the refugees "in a way that is acceptable to Myanmar because ultimately they bear responsibility and accountability for this", added Dr Balakrishnan.

Finally, Dr Balakrishnan said that this year's Asean-led meetings illustrates why the grouping is so important because, among other things, they allowed all issues to be discussed openly in a safe, constructive and comfortable forum, even among superpowers.

It also allowed its ten member states to join forces, "hanging together rather than hanging separately".

"It has allowed us to integrate our economies, it has allowed us to lower trade barriers among ourselves. To fulfil that ultimate goal of creating a single zone for production and investment, and naturally all 10 member states' economies are actually growing pretty healthily, considering the challenges that are confronting the world," he said.