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Hard-won RCEP trade pact draws queue of potential new partners

Question raised on whether new members need to have FTA with Asean first; HK already has trade deal with grouping

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The RCEP team includes (from far left) Giselle Lee, RCEP services and movement of natural persons chapter, and policy officer; Regina Tan, RCEP e-commerce chapter; Sulaimah Mahmood, RCEP chief negotiator; Janice Cai, RCEP goods chapter; Faridah Mohd Saad, RCEP investment chapter; and Tay Lide (image on tablet), RCEP goods, services and investment chapters.

Singapore

THE ink has barely dried on the Regional Comprehensive Economic Partnership (RCEP), already several parties are interested in joining the trade pact, said Singapore's chief negotiator Sulaimah Mahmood.

And while India's departure from negotiations last November caused "the greatest pain", it is welcome back at any time, she added, in an interview with the Ministry of Trade and Industry's negotiating team.

Eight years in the making, the RCEP was signed on Nov 15 between the 10 Asean member states and five of the grouping's dialogue partners: China, Japan, South Korea, Australia and New Zealand.

Said Ms Sulaimah: "We actually have queries already, from some partners asking 'Can we join?'" The pact's Trade Negotiating Committee (TNC) will have to discuss the criteria and process for admitting new members.

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One question is whether new members should first have a free trade agreement (FTA) with Asean. Hong Kong, for instance, has expressed interest and already has such an agreement.

"In the case of Hong Kong, because they're already a partner, when they knock at the door, they definitely would be considered positively." But if Canada is looking at an FTA with Asean, should they do that first, or go straight to the RCEP? "Those are the issues that the TNC will be discussing."

Ms Sulaimah recalls being one of only two committee members who were there from start to finish - the other being the chair, senior Indonesian trade official Iman Pambagyo.

Media reports painting RCEP as "China-led" are incorrect, she notes. As early as 2006, Asean was discussing such an idea. Various "Asean-plus-one" trade agreements had different rules, which was cumbersome for exporters. Consolidating these rules would make things easier.

Two studies were conducted on potential frameworks, and their findings merged for the RCEP. "It was all driven by Asean."

Still, there were differences within Asean to be worked out. In trade in goods, the original hope was to cover all tariff lines. But some Asean members' sensitivities over products such as rice or sugar meant the need for exclusions. Eventually, some 92 per cent of tariff lines were covered.

MTI team member Janice Cai, who worked on the goods chapter, noted that "sensitive products" also posed issues for partners without existing bilateral FTAs, such as China and Japan.

Did Singapore have sticking points of its own? Team member Tay Lide said: "Singapore comes to the negotiations with an open attitude. Basically that's how we hope that every other country comes to the negotiating table as well."

Even the movement of natural persons - not an area where Singapore readily gives concessions, noted Mr Tay - was something "we were willing to put on the table as well".

That issue was a major one for India, which sought more freedom of movement. It might have contributed to RCEP's largest setback: India's shock withdrawal at the RCEP Summit on Nov 4, 2019.

Negotiating team member Giselle Lee recalled how, up till late the night before, India was still in the room. While market issues remained a sticking point, the understanding was that all partners would push forward.

The next day, the leaders welcomed the conclusion of the 20 chapters. India's Prime Minister Narendra Modi was one of the last to speak - and dropped the bombshell that India would not join.

"There were countries that were very keen to have India in the (RCEP). So this then presented another problem... we were worried that this might be a domino effect that led other countries to pull out," said Ms Lee.

India was invited to all the meetings in 2020, and is welcome to rejoin at any time, said Ms Sulaimah. Prospective new members will have to wait 18 months after the RCEP enters into force, but not India. "So that's how much the 15 of us believe in the importance of India in RCEP."

The next challenge was to keep the remaining partners together. With the Covid-19 pandemic, travel restrictions put an end to in-person meetings - and to the sideline conversations that often facilitate progress. But finally, the RCEP was signed on Nov 15. Even after the long struggle, however, the pact has been criticised for a lack of ambition.

Said Ms Sulaimah: "When we embarked on the RCEP, already there was recognition that in terms of the level of ambition, it would be very difficult to match the TPP (Trans-Pacific Partnership), primarily because of the composition of the membership of the agreement."

For instance, while some partners wanted a more ambitious e-commerce chapter, others did not even have domestic e-commerce regulations yet. It was better to conclude the chapter and leave open the option of improving it in future reviews, rather than stalling, she added.

Regina Tan, who worked on the e-commerce chapter, noted that transitional arrangements were made for less-developed economies: they only have to fulfill certain obligations after some years, giving them time to put in domestic regulations first.

As team member Faridah Mohd Saad put it: "Seeking collaboration - that is what attracts most of us to the role... This idea about a common good, about compromise, about understanding each other's needs and being able to empathise."

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