ASSESSMENTS

Asian Free Trade Proposal Is Broad in Scope, Narrow in Focus

Mar 25, 2019 | 10:00 GMT

Leaders of the 16 countries negotiating the Regional Comprehensive Economic Partnership assemble for a group photo on Nov. 14, 2018, in Singapore.

Leaders of the 16 countries negotiating the Regional Comprehensive Economic Partnership assemble for a group photo on Nov. 14, 2018, in Singapore. The proposed trade agreement seeks to integrate the economies of Southeast Asia with China, India, Japan, South Korea, Australia and New Zealand.

(ROSLAN RAHMAN/AFP/Getty Images)

Highlights

  • The proposed Regional Comprehensive Economic Partnership (RCEP)'s comparatively narrow focus on tariffs to the exclusion of nontariff barriers would limit the agreement's boost to Asian trade.
  • The 16 countries negotiating RCEP likely will not reach consensus on a final deal until after the conclusion of 2019 elections in India, Australia and Indonesia.
  • Because India views free trade as a vehicle for economic growth in an era of rising protectionism, it will remain committed to negotiating an RCEP agreement, though its demands are likely to further delay a conclusive deal.
  • Despite its limitations, RCEP offers the Association of Southeast Asian Nations a chance to help promote intraregional trade.
  • China will demand a rapid resolution to negotiations so it can seek enhanced market access to offset a cooling economy against the backdrop of its trade war with the United States.

A long-running proposal to create the world's largest free trade zone has stagnated under the weight of its members' disagreements. The Regional Comprehensive Economic Partnership (RCEP) is a trade initiative between the Association of Southeast Asian Nations (ASEAN) and its six free trade partners: India, China, Australia, Japan, South Korea and New Zealand. Ambitious in scope, RCEP would encompass 3.6 billion people and account for a third of the world's total economic output. But 25 rounds of talks spanning six years have failed to produce a consensus. Now, lingering obstacles threaten to dash the prospects of sealing a final agreement by the time a high-level ASEAN summit is held in Thailand in November....

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