(YicaiGlobal) Feb. 27 — The failing Trans Pacific Partnership is bringing uncertainties to the China-backed rival Regional Comprehensive Economic Partnership, which with around 3.5 billion people and one-third of the global economy would be the world’s biggest free trade area.
Today, 700 trade negotiators from 16 countries in the Asia Pacific, including China, are in Kobe, Japan for the first round of RCEP talks since President Donald Trump pulled the US out of the TPP.
As one of the few major ongoing free trade negotiations in the world today, representatives are willing to speed up talks, but with the TPP close to failure, that pact’s signatories such as Japan and Australia now hope to introduce the TPP’s transparency criteria and investment rules into the RCEP.
The RCEP was sponsored by the 10 ASEAN countries, and China, Japan, South Korea, Australia, New Zealand and India have been invited to ratify a free trade protocol based on a single market, with the aim of eliminating tariffs and non-tariff barriers.
During this 17th round of talks, representatives will discuss matters related to all the 13 remaining items including tariff abolition and reduction as well as relaxing investment and service trade restrictions. In addition, existing TPP members such as Japan and Australia may add new items to the agenda.
It is very important for Japan to “reach a consensus on trade liberalization and high-standard rules,” Japanese Economy, Trade and Industry Minister Hiroshige Seke said at press conference before today’s meeting.
The Japanese media divided the 16 countries attending the negotiations into three groups. One of them consists of TPP members such as Japan, Australia and Singapore, which advocate “trade liberalization and high-standard rules” and oppose any agreement falling short of their standards.
China, India and the Philippines want to conclude an agreement and roll out the free trade protocol in the Asia Pacific as soon as possible, taking advantage of the US slide into trade protectionism.
The third faction consists of developing countries such as Laos and Cambodia. They are hoping to secure extra compensation from the RCEP given the fact that high-level trade liberalization may cause damage to domestic industries in these countries, they are looking to any deal for technical and infrastructure support.
Whoever manages to enlist the support of countries in the third faction will get a big boost in the negotiations. So far, countries such as India believe a lower level of trade liberalization is better for developing economies. On the other hand, Japan is trying to win the support of those economies and Seke has pledged to offer more training and other aid than before.
Japan also has a plan for itself. If a high-standard free trade agreement can be established without the US, it may convince Trump to change his mind about the TPP.
The US-China Economic and Security Review Commission, an advisory body to the US Congress, forecast in a report that if the TPP fails and the RCEP is successfully launched, China would benefit to the tune of USD88 billion. If both the TPP and the RCEP are ratified, China would benefit by USD72 billion. If the TPP is ratified, but the RCEP fails, China would lose USD22 billion.