Issue 426 November 1, 2019
The East Asia Summit, due to be held later this week in Bangkok, will hold the litmus test for Regional Comprehensive Economic Partnership (RCEP) between the members of the Association of South East Asian Nations (ASEAN) and Dialogue Partners including New Zealand.
Regional pacts have had their use in Europe, Arab Gulf and Africa.
But a cross-border Treaty involving India has been challenge for this RCEP, since 2012 and despite 27 rounds of negotiations, there is no deal in sight.
Optimism overstated
New Zealand has a major stake in the process since its dairy products can find an entry into the world’s second largest consumer market (after China) through the ASEAN corridor since a direct Free Trade Agreement has thus far eluded progress.
But Associate Trade & Export Growth Minister Damien O’Connor was overly optimistic when he said that the Partnership Agreement will be signed by the end of this year.
New Zealand sees this RCEP as harmonisation of existing agreements between ASEAN, India, China, Japan, South Korea and Australia.
As an agro-based economy, India sees flooding of its markets by foreign dairy and agricultural products as a serious threat. The country undoubtedly has the right to protect its farming sector but the policy runs counter to global partnership that it wants.
Commerce and Industry Minister Piyush Goyal has already hinted that India may withdraw from trade talks, saying “every interest of the domestic industry and people of India has to be protected.”
As the Economist observed, “An RCEP without India would probably make South-East Asian countries an even more attractive destination for companies seeking to relocate some production out of China. Vietnam, which is also a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade agreement with Canada, Mexico, and Chile, would be particularly well-placed.”
But there is little hope, at least as we wrote this Leader.
