The Jakarta Post
Sixteen nations across the Asia-Pacific region expect to conclude talks that will free up trade and investment in a region that covers 28 percent of the world's economy by the end of this year, say high-ranking officials from Indonesia and China.
Substantive negotiations might conclude at the end of this year and a draft agreement could be reviewed and signed next year, according to Iman Pambagyo, chairman of the trade negotiation committee of the Regional Comprehensive Economic Partnership (RCEP).
China-backed RCEP covers 10 ASEAN member countries and their six major trading partners ' China, Japan, India, South Korea, Australia and New Zealand ' and will create an integrated market worth US$21.4 trillion by 2025.
The US is also leading free trade talks called the Trans Pacific Partnership (TPP) with a group of nations that includes most RCEP members but excludes China.
'I see strong political will from all parties to complete the talks by year-end,' Iman told The Jakarta Post on Sunday.
The RCEP's seventh round of talks was held last month after talks began in 2013. The participating nations are still struggling to agree on tariff cuts and the scope of these cuts along with the time line for freeing up services and investments. Although the details have yet to be hashed out, the countries have agreed to liberalize services across the region.
One of the main stumbling blocks to the progress of the talks is the absence of free trade agreements (FTAs) among ASEAN trading partners that could delay negotiations. China, for instance, does not have such a pact with India, while India also does not have one with New Zealand.
Economists have warned that given the slow pace of progress in ongoing talks, the Asia-Pacific nations will likely produce a non-substantive deal by the deadline at the end of this year.
Iman, however, underlined that it would be necessary for the negotiating parties to reach a 'credible agreement' instead of just meeting the deadline.
'RCEP should go beyond tariff reduction. It must be more empowering and facilitative to allow the regional supply chain to go deeper,' he said.
China, whose economy is driven by exports and is seen as having strong interests in the RCEP, also wants to complete negotiations by the end of this year.
China's Trade Minister Gao Hucheng said Saturday the country would 'work hard' to wrap up RCEP talks before the end of this year, Reuters reported.
'[China will] continue to unswervingly push forward and quicken the pace of China's free-trade agreement strategy', Gao told a news conference.
The trade and investment pact will ease flows of goods, services, investment and labor with members, according to a study by the Asian Development Bank (ADB).
Indonesia may increase its GDP by 1 percent by 2025 by implementing the deal.
As for ASEAN, the RCEP has been considered a tool to uphold its centrality following the TPP, which also includes some of its members, such as Singapore, Brunei, Vietnam and Malaysia.
The Trade Ministry's director general for international trade cooperation, Bachrul Chairi, said Indonesia still maintained its position to achieve a target of scrapping 65 percent of around 10,000 tariff lines of goods. However, all this is still under negotiation with the 15 partners. It is possible that another 15 percent of tariffs will be gradually scrapped 10 years after the RCEP comes into effect.
'Indonesia wants to raise its level of ambition in order to achieve an agreement from which it can benefit, but it will still wait and see if there is more flexibility shown by other partners,' he said.
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