Left out of the US-backed Trans-Pacific Partnership (TPP) trade pact struck last week, China and India approach this week’s talks for a huge Asia-wide equivalent with fresh urgency, lest competitor nations steal a march on export access.
Beijing is a key driver of the Regional Comprehensive Economic Partnership (RCEP), a proposed 16-nation free-trade area that would be the world’s biggest such bloc, encompassing 3.4 billion people.
“Member countries will be under pressure to fast-track negotiations for RCEP,” said a senior official in India, which is keen to avoid being excluded from major trade accords.
While China’s rivalries with India and Japan are likely to complicate progress, it has incentive to get things moving.
China’s central bank estimates the world’s second-largest economy could forfeit a 2.2 percent boost to GDP if Beijing does not join the TPP, according to a commentary by People’s Bank of China chief economist Ma Jun (馬駿) published in the official Shanghai Securities News on Friday.
China stands to lose ground to manufacturing competitors such as Vietnam, which as a TPP member is to have greater duty-free access to the US and other member nations, Beijing-based University of International Business and Economics professor Tu Xinquan (屠新泉).
“It’s not that there is a competition between the RCEP and the TPP, but overall, because of the pressure put on by the TPP, there’s hope for a faster end to negotiations for more liberalized trade in the region,” Tu said.
The RCEP was first conceived by ASEAN, but China is increasingly prominent as backer of the proposed pact.
While the RCEP has largely been seen as an alternative to US-led trade plans, some say that view is evolving.
China might ultimately look to steer RCEP talks toward a broader pact that would encompass the TPP into a Free Trade Area of the Asia-Pacific, Seoul-based Korea Institute for International Economic Policy head of regional trade studies Kim Young-gui said — an idea first put forward by APEC.
Seven countries — Australia, Japan, Malaysia, New Zealand, Singapore, Vietnam and Brunei — are in both the TPP and RCEP.
“New Zealand views TPP and RCEP as complementary stepping stones to the vision of a Free Trade Area of the Asia Pacific,” a New Zealand Ministry of Foreign Affairs and Trade spokesperson said.
The TPP, reached on Monday last week after marathon talks between the US and 11 other Pacific Rim nations, aims to liberalize commerce in 40 percent of the world’s economy and would be a legacy-defining victory for US President Barack Obama.
Obama wants the TPP to help boost US influence in East Asia and counter the rise of China, but Beijing officially welcomed the pact, saying it hoped the deal would promote Asia-Pacific trade.
“We hope that regardless of whether it is the TPP or the RCEP, they both can supplement, promote and be beneficial to strengthening the multilateral trade system,” Chinese Ministry of Foreign Affairs spokeswoman Hua Chunying (華春瑩) said.
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