Different stages of growth will test RCEP

The different states of economic development of countries in the Regional Comprehensive Economic Partnership (RCEP) trade deal will prove a key challenge for what is set to be the world's largest trading bloc, said officials and academics at the Boao Forum yesterday.

China, Australia, Japan, New Zealand, South Korea and the 10 Asean states signed the free trade agreement last November, and Singapore was the first to ratify it earlier this month.

The RCEP agreement impressively includes a wide range of participating economies, from developed to developing, but this also makes it challenging when trading policies take effect, said Mr Cai Qiang, director of the tariff department in China's Ministry of Finance.

He was speaking during a panel discussion on the prospects and influences of the RCEP at the high-level forum bringing together academics, government officials and business executives in Hainan.

Chinese President Xi Jinping is set to deliver a keynote speech at the opening plenary session today.

During the discussion, Mr Cai recommended that the bloc define itself by focusing its goals on supporting development according to international standards.

But there will be winners and losers in every trade bloc, said Ms Isabelle Durant, acting secretary-general of the United Nations Conference on Trade and Development, noting the experience of the European Union. "It's important to help the less developed countries to make sure it's a win-win situation for all," she said.

Diversity and dynamism are a strength of the RCEP economies and the new bloc could help narrow the developmental gap between nations, but there is still a risk that it could expose local firms to competition against rivals with an unfair advantage, she added, advocating for proper competition laws to negate the adverse effects.

The RCEP is an inclusive multilateral agreement, unlike the original Trans-Pacific Partnership (TPP), which in its original form was designed to exclude China, said Professor Zheng Yongnian, acting dean of the Advanced Institute of Global and Contemporary China Studies at the Chinese University of Hong Kong, Shenzhen.

This was echoed by China's former vice-minister of foreign trade and economic cooperation Long Yongtu, a key figure in the country's membership of the World Trade Organisation. "I hope the RCEP will have an open mind that will allow all countries to take part... and after some time, in some form, can be melded together with the TPP."

China last year said it would consider joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which replaced the TPP after the US pulled out of the original version.

Beijing and Washington have been locked in a rivalry over the past three years that could easily derail an Asia-Pacific-wide trade agreement if countries are forced to choose between the superpowers, Prof Zheng said.

The RCEP will ease goods and services trade, facilitate the flow of foreign investments, and enhance protection in areas such as e-commerce and intellectual property.

At a separate panel, former US ambassador to China Max Baucus urged both sides to "hit pause" on the critical statements while working out their issues in private, and exhibit moves that project good faith and respect for each other.