By Prarthana Mitra
China, Japan, Australia, India and other Asia-Pacific countries kicked off a two-day summit Monday in Singapore, to finalise the terms of a mega-trade deal that is expected to be a strong response to America’s increasingly protectionist trade policies.
After an initial period of caution, India is now heavily invested in the China-backed deal, formally known as Regional Comprehensive Economic Partnership (RCEP) poised to be the world’s biggest free trade pact. The Singapore summit could end in positive news about the deal, which is going forward without US participation and talks around which first started in 2012.
Trump’s commitment to Asia is questionable
Essentially framed as a challenge to US president Donald Trumps America First agenda, the deal has not only excluded Trump from the negotiations, but he himself has opted of the annual summit this year. This sends Trump’s Asia-Pacific trade relations for a toss, although they were on rocky terrain ever since he came to power and withdrew from the Trans-Pacific Partnership, a pact put together in the hope that it would bind rapidly developing Asian economies to the West, so as to be able to effectively counter China.
The months-long trade war between the US and China has also had far-flung repercussions on the world economy. Recently buoyed by the impact that Chinese tariffs on American soyabean exports have had, Beijing is eager to get a headstart in the war.
A realistic blueprint that could be the anti-TPP
Further, with Trump’s unilateralist policies setting the stage for Beijing to assume leadership of the region’s economic relations with the west, a broad announcement on the sidelines of the meet is reportedly on the cards, as 20 world leaders from the member nations look forward to completing the massive deal that could disrupt international trade as we see it. The summit was one of Prime Minister Narendra Modi’s top priorities during his diplomatic visit to Singapore. Russian president Vladimir Putin also participated in the negotiations.
The 16-member RCEP covers half the global population, comprising key members of regional bloc the Association of Southeast Asian Nations (ASEAN), envisages a free trade deal among the nations could cut tariffs and integrate markets. That said, Chinese leaders will have to address the very real anxieties pertaining to weak protection in terms of employment and environment, before the deal goes through.
Challenges to realising the biggest trade pact
According to The Wire, India has a trade deficit with ten out of 16 countries in the pact, and experts have advocated caution in negotiating tariffs for manufacturing and farm products. Meanwhile, RCEP members want India to commit duty cuts on at least 92% of tariff lines. Fearing that it would cede too much ground to China, Indias initial proposal was a three-tier tariff reduction plan, which covers 42.5% liberalisation in tariffs. Negotiations may go on well into the next year to smoothen these wrinkles, with the final blueprint due mid-2019.
Deborah Elms, executive director of the Asian Trade Centre, told AFP that the closure of the deal would be important as a symbol of Asias commitment to trade at a time of rising global tensions.
Prarthana Mitra is a staff writer at Qrius