Asian accord for mega FTA talks
Posted by seumasach on September 2, 2012
1st September, 2012
Not a single Indian journalist, it seems, bothered to cover the meeting of the trade ministers of the 10 ASEAN countries and six partners (China, Japan, South Korea, India, Australia and New Zealand) in Cambodia on Thursday. The Indian press corps instead headed westward — to Tehran, which is probably more sexy than Siem Reap.
They got it wrong. Perhaps, NAM will muddle through. But the decision taken at the meeting at Siem Reap will most certainly turn out to be one of the most profound developments in the unfolding Asian drama, rewriting the geopolitics of the fastest-growing region in the world. The meeting decided that the 16 countries will begin negotiations at a regional summit in November to lead Asia toward a giant economic and free trade area.
The Regional Comprehensive Economic Partnership [RCEP] proposal could phenomenally transform a region of 3.5 billion people (about half the world’s population) as an integrated market with a combined GDP of $23 trillion, about a third of the world’s current annual GDP.
The idea is to string together the ASEAN’s 5 existing FTAs (including with India) to a single framework. Interestingly, Japan is the prime mover behind the idea, as the RCEP would be a “vital lifeline for the nation, as its trade policy has come to an impasse.” Interestingly, Tokyo prefers the Asian integration within RCEP to the proposed Trans-Pacific Partnership mooted by the United States.
China, of course, has reason to be happy . China would see that the proposed RCEP of 16 nations holds the potential to create a level of interdependency (and mutual benefit) in the Asian region that could help temper the tensions in the South China Sea.
India is also enthusiastic about the RCEP proposal. In the final analysis, India’s FTA with the ASEAN is boosting the trade by over 40%. Commerce Minister Anand Sharma has pressed for early conclusion of the negotiations leading to the services and investment agreements between India and ASEAN.
The RCEP negotiations may prove to be a long haul. But the decision to kick start negotiations signifies that the ASEAN doesn’t regard the US’ “pivot” to Asia to be the only show in town. The pull of greater trade and investment and economic partnership involving China (which is bound to be the dominant partner in the RCEP) is very much coloring the Asian perspectives.
The US senses this too. For the first time, US Trade Representative Ron Kirk attended the ASEAN economic summit, signifying that the proposed Asian economic integration holds deep implications for the US’ Asia-Pacific strategy.
But this isn’t a zero sum game. Kirk’s remarks following his ‘bilateral’ with his Chinese counterpart Chen Deming on the sidelines of the ASEAN economic summit bear this out. Kirk said, “Minister Chen and I should know that one of the few bright spots in the global economic environment is the relationship between China and the US, and we are committed to resolving trade inheritance so that the relationship continues to grow.” Evidently, no containment strategy here
In These New Times 
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