The View From Asia

Weighing merits of mega trade pacts

Asia News Network commentators reflect on recent discussions over the Trans-Pacific Partnership and Regional Comprehensive Economic Partnership deals. Here are excerpts:

A safety valve against US pressure

Editorial

The Yomiuri Shimbun, Japan

An important step has been taken to put the brakes on protectionism, which has been growing in the United States. Japan must strengthen solidarity among the other countries concerned, to work towards putting into effect a fresh agreement as an engine to promote free trade in the world.

The 11 countries - without the US - participating in the Trans-Pacific Partnership (TPP) free trade pact have reached a broad agreement on a new deal. The member nations aim to seal the agreement early next year at the earliest so that the pact could take effect in 2019.

The TPP pact covers a wide range of fields, including intellectual property rights and the reduction and abolition of tariffs. It is extremely significant that moves have started anew to conclude this trade deal covering the Asia-Pacific region, which has been experiencing remarkable growth.

The TPP deal will serve as a set of influential guidelines for other trade frameworks, including the Regional Comprehensive Economic Partnership that has been negotiated by 16 countries, including Japan, China, South Korea and India.


Trade ministers and delegates from the 11 remaining members of the Trans-Pacific Partnership meeting on the sidelines of the annual Asia-Pacific Economic Cooperation leaders' meetings in Danang, Vietnam, on Nov 9. The member nations - without the US - have reached a broad agreement on a new deal, and aim to seal the trade agreement early next year at the earliest, so that the pact could take effect in 2019.  PHOTO: REUTERS

The US administration of President Donald Trump has been advocating a parochial "America First" policy. In the renegotiations on the North American Free Trade Agreement, Washington has been demanding trade rules that would be extraordinarily advantageous to Washington. It has also pressed South Korea to agree to renegotiate their bilateral free trade agreement (FTA). Mr Trump aims to reduce trade deficits with Japan and shows a keen interest in launching bilateral FTA talks.

For Japan, the TPP could work as a safety valve to let off any pressure applied by the US. This is because it is possible to assert that Japan is not able to make more concessions in negotiations with the US alone for a bilateral trade deal than in the TPP deal, which has been negotiated by taking into consideration the possibility of entering markets other than the United States.

'Damp squid' of a deal

M. Veera Pandiyan

The Star, Malaysia

Can dead creatures be revived? They can't, but they surely can appear to be, if only for a while.

In Hakodate in Hokkaido, Japan, there is a famous dish called katsu ika odori-don, which literally means "dancing squid rice bowl". The bowl is filled with rice and an assortment of meats and vegetables, topped by a freshly killed squid - minus its mantle or body, leaving only a stump and tentacles. This is not a dish for the squeamish. After serving, the chef splashes soya sauce over the cuttlefish, causing it to seemingly "come alive" and wriggle around on top of the bowl.

Let's look at another creature that took 10 years to grow before it was swiftly slain, but has been revived. I'm referring to the TPP, which evolved into the TPP-11 after the United States withdrew. It has since been rebranded as the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP).

When US President Donald Trump signed an executive order to formally quit the original 12-nation pact covering nearly two-fifths of the global economy, it looked dead in the water. However, Japan took the initiative to revive the agreement, supported by Australia.

Despite the rhetoric and lofty ideals, the original TPP was geared towards containing China and rewriting the rules of global trade as determined by the US and powerful corporate lobbyists in Washington.

Minus the US, it was just another pact aimed at countering China's economic influence, promoted through Asean's Regional Comprehensive Economic Partnership initiative.

Trade ministers of the 11 countries issued a statement last Saturday claiming the "core elements" of the CPTPP had been agreed upon. They suspended 20 clauses in the original text, which were included at the insistence of Washington in exchange for access to the US market. Eleven were on intellectual property rights, one of the key contentious areas, covering both patent and copyright periods.

Little has been said to dispute the perception that the main beneficiaries of the TPP are giant multinational corporations and rich investors.

To put it briefly, for most of its members, the costs of being in the zombie pact outweigh its benefits.To use an old English phrase, the CPTPP is a damp squib - a thing that fails to satisfy expectations, an anti-climax to what was touted. The mining term for a dud explosive is often mispronounced as "damp squid".

In the case of TPP-11, which has been rendered meaningless without US participation, both descriptions fit.

Make RCEP a reality

Editorial

China Daily, China

Five years have passed since the idea of the Regional Comprehensive Economic Partnership (RCEP) was first raised in 2012, but negotiations have yet to conclude on the mega-trade pact involving the 10 member states of Asean and China, South Korea, Japan, Australia, New Zealand and India. The first RCEP Summit, which was held in Manila recently , again highlighted the need to fast-track the negotiations.

Few question the potential benefits to be reaped from the creation of the world's largest trade bloc and the positive role it can play in propelling global growth.

And there have been "substantial outcomes" reached in the rounds of talks that have already taken place.

Yet the slow progress of the negotiations, due to a combination of technical hurdles and domestic politics, means a loss of development opportunities for the countries involved.

Economic integration and cooperation among the countries involved are all the more imperative, given the rising protectionism in the region and beyond. According to the Pacific Economic Cooperation Council annual survey of opinion leaders released last week, rising protectionism is considered the top risk to growth in the Asia-Pacific region.

China, as a standard-bearer of global free trade and staunch supporter of the RCEP, has always advocated an inclusive regional free trade system, and has proposed the establishment of the Free Trade Area of the Asia-Pacific.

This position stands in sharp contrast with Japan, which has sought to turn the TPP, though rendered flaccid after the United States' withdrawal, into a geopolitical tool designed to counter China's influence in the region.Other countries should work together to bring the RCEP into reality at an early date.


Tackle challenges for prosperity

Editorial

The Jakarta Post, Indonesia

After more than 18 rounds of negotiations since 2012, 16 Asian and Pacific countries that account for almost 50 per cent of the world's population, more than one-third of global trade and 40 per cent of the world's gross domestic product, have moved closer to a multi-stage, regional mega trade partnership.

The Regional Comprehensive Economic Partnership (RCEP) agreement will surely be a big leap in global trade deals, in view of the wave of populist anti-globalisation sentiment. It is also a great diplomatic achievement for Indonesia, which proposed the RCEP idea in 2011 when it served as Asean chair. But negotiations that started in 2012 were overshadowed by the United States-initiated Trans-Pacific Partnership (TPP) trade negotiations.

The RCEP will create one of the world's largest trading blocs with Asean at its core, and will plug the regional alliance of 10 nations into the global economy. The new agreement will also consolidate Asean's overlapping trade partnerships into a single trade agreement.

Two main factors have made the 16 countries persevere in their negotiations for such a large trade pact. The most important of these is the fact that trade-linked industrialisation has always been the main driver of economic growth in East Asia. The other factor is US President Donald Trump's decision early this year to withdraw his support for the TPP, which put this plan in limbo.

Certainly, the upcoming negotiations on the technical details of the final RCEP agreement will still be challenging.

The widely different economic development levels of member countries could get in the way of settling implementation schedules.

Moreover, the RCEP agreement governs not only trade, but also investment protection, labour rights and several other important economic issues. But we are confident that the participating countries' full awareness of the great benefits of free trade flow and continued nurturing of trust among them will strengthen their resoluteness towards completing the final deal soon.


  • The View From Asia is a compilation of articles from The Straits Times' media partner, Asia News Network, a grouping of 23 news media entities.
A version of this article appeared in the print edition of The Straits Times on November 18, 2017, with the headline 'Weighing merits of mega trade pacts'. Print Edition | Subscribe