BOAO - 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 on Monday (April 19).
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 is impressive because of the wide range of participating economies, from developed to developing, but this also makes it challenging when trading policies take effect, said China's Ministry of Finance Tariff Department Director Cai Qiang.
He was speaking during a panel on prospects and influences of the RCEP at the high-level forum bringing together academics, government officials and business executives on the tropical island of Hainan.
Chinese President Xi Jinping is set to deliver a keynote speech at the opening plenary session on Tuesday.
During the RCEP panel, 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 acting secretary-general of the United Nations Conference on Trade and Development Isabelle Durant, 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 within 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 in 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 School of Advanced Institute of Global and Contemporary China Studies at the Chinese University of Hong Kong, Shenzhen.
This was echoed by former vice-minister of Foreign Trade and Economic Cooperation Long Yongtu, a key figure in China's membership of the World Trade Organisation.
"I hope that 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," he said.
China said last year that it would consider joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the pact that replaced the TPP after the United States pulled out of the original version.
Beijing and Washington have also been locked in a rivalry over the past three years that could easily derail an Asia-Pacific-wide trade agreement if countries are being forced to choose between the superpowers, Prof Zheng said.
It is a clear sign that a trade bloc cannot succeed without political latitude, said Ms Durant.
"Trade is not one-sided, it's highly related to geopolitics," she said.
The agreement will enter into force 60 days after it has been ratified by at least six Asean member states and three non-Asean signatories and their instruments of ratification, acceptance or approval have been lodged with the Asean secretary-general, designated as the depositary for the agreement.
Participating countries are aiming for the pact to enter into force on Jan 1 next year.
While China and Thailand have completed their domestic ratification processes, they have yet to deposit their instruments of ratification while Japan's Cabinet approved a Bill to ratify the trade agreement in February.
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.
Tariffs will be eliminated for a range of goods, with additional preferential market access for specific products like plastics and mineral fuels in selected markets such as China, Japan and South Korea.
At a separate panel, a former US ambassador to China 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.
Mr Max Baucus, who was ambassador from 2014 to 2017, also called on Washington to rethink its sanctions policy, which he said tend to backfire and have very little impact on their targets.
"In many cases, I think President Xi Jinping does tend to care too much about the sanctions, whether its on Hong Kong, Xinjiang... they have very little effect and in fact, they are counterproductive," he said.