China-backed RCEP trade deal pushed back to 2019

Arturo Kim
November 15, 2018

The United States wants Beijing to withdraw its missiles from the Spratly Islands in the South China Sea, US officials announced during talks at the state department.

President Rodrigo Duterte called on Asean-member states for the "swift" conclusion of the China-backed Regional Comprehensive Economic Partnership (RCEP) after Asia-Pacific trade ministers failed to reach their year-end target of a "substantial conclusion" during the economic ministers' meeting here.

Known as the Regional Comprehensive Economic Partnership (RCEP), the trade deal would cover nearly half the world's population.

The RCEP has always been seen as a rival to the Trans-Pacific Partnership, now renamed the Comprehensive Progressive Trans-Pacific Partnership, a trade deal that was spearheaded by the United States until Trump withdrew American involvement a year ago.

Countries across the region, many of which have relied heavily on trade to grow their economies, are responding with strong talk about free trade. But stumbling blocks remain, including India's reluctance to open up its markets, particularly to Chinese firms.

The US has imposed tariffs on roughly half of what it imports from China, prompting Beijing to retaliate with its own levies.

"The future lies in RCEP", Indian trade minister Suresh Prabhu told reporters, but urged a cautious and patient approach to talks to ensure "every country will benefit from it".

"'[Those trade tensions] will be a reason for other developed countries to adopt protective measures against developing countries, including Asean countries", he said.

Also, the spectre of possible leadership changes with several general elections scheduled early next year - India, Thailand, and Indonesia - have also complicated the timeline for a deal.

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Chinese Premier Li Keqiang - for a second day - struck a conciliatory note on the trade spat, saying he was hopeful that the two sides would find a way to prevent it from escalating further.

The deal was given extra impetus after Trump pulled the USA out of the rival Trans-Pacific Partnership (TPP).

Asian nations have given up hopes of completing a 16-nation trade bloc this year, with Chinese and Australian officials now looking to finalize the deal next year.

Notably absent when regional powers such as China, Japan and India seek to enlist support for a multilateral trading system will be U.S. President Donald Trump, whose decision to skip the Asia summit has raised questions about his commitment to a regional strategy aimed at checking China's rise.

However, the Beijing-backed pact is much less ambitious than the TPP in areas such as employment and environmental protection.

Despite Duterte comments, the Philippines has been one of the most vocal critics of China's aggression in the sea, where it has built up military installations and other facilities.

At the meetings, ASEAN and China will try to make headway in negotiations for a code of conduct for the South China Sea, which Beijing claims nearly in its entirety while ASEAN members Vietnam, the Philippines, Malaysia and Brunei claim parts of the area.

The Asean summit, which formally opens on Tuesday afternoon, is expected to sweep in trade, maritime disputes and the Rohingya crisis.

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