Wed, Dec 05, 2012 - Page 8 News List

Race to build a dominant trade bloc

By Chen Hurng-yu 陳鴻瑜

ASEAN has signed separate free-trade agreements (FTA) with China, South Korea, Japan, Australia, New Zealand and India. ASEAN would like to use these bilateral FTAs to expand its area of integration and set up the RCEP. However, for bilateral FTAs like these to be expanded into a comprehensive FTA, obstacles to horizontal integration must be overcome.

For example, negotiations on a trilateral FTA between China, Japan and South Korea are still ongoing, and the same is true of a proposed regional trade arrangement between China and India. In other words, if China, Japan, South Korea, Australia, New Zealand and India could not reach agreements on these proposed free-trade pacts, the RCEP will remain elusive.

The US has proposed at previous APEC meetings that an Asia-Pacific free-trade area be set up, but the proposal met with resistance from ASEAN, so Washington started promoting the TPP instead. The key issue is the TPP calls for a full and unreserved opening of markets, requiring a higher degree of openness than that of the RCEP and which ASEAN countries see as a stumbling block.

The only way for ASEAN to contend with the impact of the TPP is to consolidate its own organization. However, ASEAN cannot prevent its member states from joining the TPP, so it is hoping to expand its territory by establishing an RCEP, which it wants to be the region’s leading free-trade organization.

For ASEAN, the road to establishing an RCEP is beset with difficulties. Aside from waiting for FTAs to be signed between China, Japan, South Korea, Australia, New Zealand and India, it has to deal with competition and harassment from the TPP.

Chen Hurng-yu is a professor in the Graduate Institute of Asian Studies at Tamkang University.

Translated by Julian Clegg

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