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RI pins hope on RCEP as global trade flounders
The government is hoping a free trade agreement involving 16 Asian countries will be concluded by the end of this year so Indonesia can boost its exports amid a rise in protectionism globally
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span>The government is hoping a free trade agreement involving 16 Asian countries will be concluded by the end of this year so Indonesia can boost its exports amid a rise in protectionism globally.
Talks on the Regional Comprehensive Economic Partnership (RCEP), which comprises all 10 ASEAN member states as well as Australia, China, India, Japan and South Korea, began in 2012. No agreements have so far been made.
The 16 countries represent 45 percent of the world’s population, a combined GDP of about US$21.3 trillion and 40 percent of world trade, making the RCEP a highly strategic agreement to its members.
Trade Minister Enggartiasto Lukita said he was confident that talks would finally be concluded this November, as external predicaments have increased pressure on RCEP leaders to take action.
“The RCEP is the largest agreement we have in our current pipeline [...] and we hope to be able to conclude talks this November,” Enggartiasto Lukita told reporters at his office on Wednesday. “We have spent the past eight years not having ratified any comprehensive agreements, and if we do not get anything into force right now, we will lose and will not be able to trade.”
He pointed to how Indonesia had lost out to Malaysia in terms of market access for palm oil in Turkey and India, as Malaysia already had agreements with the two countries to lower tariffs.
Speaking on the same occasion, Trade Ministry International Trade Negotiation Director General Iman Pambagyo said the conclusion of the RCEP would send a strong message to the global community, especially with the WTO losing ground as it has still not appointed the much-needed new members for its appellate body.
“If 16 countries sign the trade agreement at the same time as the WTO goes defunct because it has not settled its appellate body, we would send a very serious and strong message to everyone,” Iman said.
Iman said that according to his calculations, the RCEP, once it has gone into force, could improve Indonesia’s trade with the other 15 member countries, especially with India, Japan, China and South Korea, by as much as 7 percent in the first five years.
The RCEP had become even more crucial given the continued global trade slowdown caused by the United States-China trade war, which had seriously impacted the global supply chain, including in Indonesia, said minister Enggartiasto.
The WTO, for instance, predicted global trade growth to reach just 2.6 percent this year, slower than the 3 percent recorded in 2018 and far below a previous forecast of 3.7 percent, he said.
The WTO has cited a long list of causes for to the slowdown, most notably the threats of higher tariffs by US President Donald Trump and the ongoing Brexit negotiations.
“I would say there are no countries that would be able to record a significant rise in trade today [...] with such uncertainties, it would be hard for us to maintain our market access unless we accelerate the conclusion of trade agreements, particularly the RCEP,” said Enggartiasto.
Indonesia, which leads the ASEAN delegation in RCEP talks, has prepared a report on the agreement that will be addressed at the upcoming 34th ASEAN Summit in Thailand from June 20 to 23.
The report would be then brought to Beijing where it would be presented to the rest of the RCEP member countries for approval, thus closing in on the conclusion of the agreement, he added.
