China stamps dominance

If RCEP is signed it will be another blow to the United States’ ability to be able to engage with Asia Pacific.

With the annual Asia Pacific Economic Cooperation (APEC) Forum led by the United States called off this year, Southeast Asian leaders are racing to get a sprawling China-backed trade pact over the line at the Association of Southeast Asian Nations (ASEAN) meeting in Thailand.

The push for the Regional Comprehensive Economic Partnership (RCEP) has Beijing’s bruising trade war with Washington as backdrop.

If signed, the RCEP will be the world’s largest trade pact and is seen as a way for Beijing to cement trade ties in Asia as Washington retreats from the region.

Chile would have hosted the annual assembly of the Pacific nations, but public unrest which has been going on for weeks forced the Chilean government to scrap hosting the event.

Leaders are hoping for a breakthrough in RCEP talks at the ASEAN Summit after seven years of negotiations over the deal, which would comprise 30 percent of global commerce and half the world’s population if signed.

“They will try to get enough together so they can sign something,” even if it is not a final deal, said Juan Sebastian Cortes-Sanchez, a Singapore-based policy analyst at the Asian Trade Centre.

The RCEP is already on its final stage of discussions, Department of Trade and Industry (DTI) Secretary Ramon Lopez had said, expressing hope that the deal would be signed during the Asean Summit this week.

This week’s ASEAN Summit comes as Washington and Beijing push for the signing of a partial agreement in a bid to roll back months of tit-for-tat tariffs on billions of dollars’ worth of goods that have rattled both economies.

RCEP is seen as a way for China to assert its trade dominance in Asia after the United States pullout of the Trans-Pacific Partnership (TPP) in 2017, which would have been the world’s biggest free trade deal.

Australia and New Zealand have called for better labor and environmental rights, without which RCEP critics fear trade standards could drop in Asia.

It could also work to further isolate the US from Asia after its pullout from the TPP, which has since been reborn as a watered-down version without Washington.

If RCEP is signed, it will be “another blow to (the United States’) ability to be able to engage with Asia Pacific,” Cortes-Sanchez said.

In what is being read by some as a snub to this weekend’s meeting, the US will send national security advisor Robert O’Brien and commerce chief Wilbur Ross.

US Vice President Mike Pence attended last year’s ASEAN Summit in Singapore, and President Donald Trump was at the 2017 meeting in the Philippines.

But Trump’s failure to show this year is a “missed opportunity,” said analyst Thitinan Pongsudhirak of Thailand’s Chulalongkorn University.

“Showing up counts for everything,” he said.

But members risk losing steam after dozens of rounds of negotiations and several missed deadlines to sign the pact.

Commerce ministers met Friday after an hours-long negotiation session to hammer out sticking points, as India digs in over concerns its market will be flooded with cheap made-in-China goods.

“There is one last step that every country has to find the solution to,” said Thai commerce minister Jurin Laksanawisit at the start of the meeting.

Safeguards included in the proposed RCEP between ASEAN and six major economies are seen to protect the Philippines from greater economic competition.

“I would suppose that gains by the Philippines from the (safeguard) mechanism of RCEP will be used for the sectors to improve and become competitive,” Presidential Communications Operations Office (PCOO) Secretary Martin Andanar said.

The RCEP is a proposed free trade agreement between the ASEAN, which consists of Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, and its six Free Trade Agreement partners, namely China, Japan, India, South Korea, Australia and New Zealand.

It was introduced during the ASEAN Leaders Summit in Bali, Indonesia in November 2011 to address two proposed trade agreements, the East Asia Free Trade Agreement and the Comprehensive Economic Partnership in East Asia (CEPEA).

The proposed East Asia Free Trade Agreement involves the ASEAN, China, Japan and South Korea, while the CEPEA includes the 13 economies proposed to be covered by the East Asia Free Trade Agreement plus India, Australia and New Zealand.

Formal RCEP negotiations started at the ASEAN Summit in Cambodia in November 2012.

Andanar said the proposed free trade deal will open up opportunities for ASEAN’s 600-million population to tap a bigger market.

“I’m very optimistic that after all of the time and the money invested by the different nations, especially ASEAN, there is no reason anymore why this will not be finalized this time,” Andanar said.

“For us, ASEAN, it is very important that we can also send for export our products to other countries that we cannot do now because of high tariff rates. By having RCEP, we essentially equalize further the playing field in our ASEAN region and the additional countries,” he explained.

Chinese premier Li Keqiang will attend the three-day summit in Bangkok where simmering tensions in the South China Sea will also top the agenda. Indian Prime Minister Narendra Modi will also be there, as he battles fears at home that key industries like metals, textiles and dairy could be hard-hit by RCEP, which loops in 10 Southeast Asian economies along with Japan, India, New Zealand and Australia.