Join Asean in push for RCEP by next year, PM Lee tells India PM Modi

Prime Minister Lee Hsien Loong with Indian Prime Minister Narendra Modi at the Asean-India summit on Nov 15, 2018.
Prime Minister Lee Hsien Loong with Indian Prime Minister Narendra Modi at the Asean-India summit on Nov 15, 2018.ST PHOTO: GAVIN FOO

SINGAPORE - Prime Minister Lee Hsien Loong on Thursday (Nov 15) urged India to join Asean in a push to create the Regional Comprehensive Economic Partnership (RCEP), the world's largest free trade area, next year.

"I am glad that we have made tremendous progress this year to advance the RCEP negotiations. We are now close to the finishing line, although further work remains to finalise the remaining details," Mr Lee said in remarks during the annual Asean-India summit, attended by Prime Minister Narendra Modi.

The proposed pact between 16 nations, including the 10-member Asean grouping and its six free trade agreement partners Australia, New Zealand, Japan, China, South Korea and India, comprises 45 per cent of the world's population and a combined gross domestic product of about US$25 trillion (S$34.4 trillion), exceeding that of the United States.

The pact is seen as vital to securing the region's continued prosperity, especially after a trade war broke out between its vital trading partners US and China.

Mr Modi tweeted after the Asean-India meeting: "Cementing old bonds in pursuit of a glorious future. Had a great interaction with Asean leaders at the Asean-India Informal Breakfast Summit. We are happy that ties with Asean are strong and are contributing to a peaceful and prosperous planet."

India has been somewhat hesitant in joining RCEP, unwilling to cut tariffs and open its market wider in the face of strong opposition from its farm sector as well as industries like steel and textiles.

The negotiations come at a sensitive time for Mr Modi, who is seeking re-election next year.

 
 
 
 

New Delhi is especially guarded as the proposed pact includes China, India's key trading partner as well as competitor. India has also wanted RCEP to include the service sector and improved access for its professionals.

Pointing to the trade potential that remains to be unlocked, Mr Lee said: "We should make the full effort to bring the RCEP negotiations to conclusion in 2019.

"Together with the Asean-India Free Trade Area, we hope that this will help us reach the Asean-India trade target of US$200 billion in total trade by 2022."

The Asean-India FTA was signed in 2010.

Bilateral trade between Asean and India has grown to around US$80 billion, but seen as far short of its true potential. Asean nations are increasingly investing in India, including in ports, highways, townships and food processing, with the Modi government improving ease of doing business.

Mr Lee also called for better maritime, air, land and digital connectivity between Asean and India, noting the progress made on the India-Myanmar-Thailand trilateral highway with an extension to Laos, Cambodia and Vietnam.

"Enhancing air links will certainly strengthen businesses and people-to-people linkages and in order to help both Indian and Asean carriers tap new and emerging markets," he added.

Under Mr Modi's Act East policy, India's profile in South-east Asia has been on the rise. Mr Lee noted that India has consistently supported Asean centrality, including in a speech made by Mr Modi at the Shangri-La Dialogue in Singapore in June where he expanded on his vision for the Indo-Pacific at a time when the region feels competing pulls between the US and China.

"This period of geopolitical uncertainty gives new impetus for Asean and like-minded partners like India to deepen our cooperation," Mr Lee said.

Mr Modi had last met the Asean leaders in January at a commemorative summit in New Delhi to mark the 25th anniversary of Asean-India relations. They were his guests during India's Republic Day parade.

"Asean and India must continue to enhance our strategic partnership," Mr Lee said, noting that Singapore has always been a strong and consistent advocate for India's inclusion in the Asean community.