ECA

RCEP: Nineteen Rounds And Counting…

27.07.2017 Deborah Elms
RCEP: Nineteen Rounds And Counting…

The 19th round of negotiations in the Regional Comprehensive Economic Partnership (RCEP) is wrapping up this week in India. These are the megaregional trade talks that will eventually unite 16 countries across Asia (Australia, Brunei, Cambodia, China, Japan, India, Indonesia, Laos, Malaysia, Myanmar, New Zealand, Philippines, Singapore, South Korea, Thailand, and Vietnam).

While 19 rounds sounds like a lot (and certainly feels like it to the hardy few that have been involved from the beginning in 2013), in reality, the serious work on the agreement only began about halfway through and has accelerated recently. [The full list of rounds is shown here and our latest RCEP Policy Brief on Trade Facilitation suggestions is here.]

While RCEP is not the TPP, as a Talking Trade post from last year detailed, these are still extremely complicated negotiations. The 16 countries involved have very diverse interests and objectives. All were drafted into this exercise by way of their involvement with ASEAN and each has varying levels of enthusiasm for the integration project.

The negotiation agenda is also complicated. This round saw the continuing expansion of the issues under discussion with the movement of both trade remedies and government procurement from “expert group meetings” to the creation of formal working groups tasked with negotiating potential chapter outcomes.

RCEP now includes roughly 15 substantive topics that have to be concluded simultaneously with 16 different and diverse parties. Getting to “yes” is going to be tough.

It should therefore come as no surprise that a November 2017 “deadline” is not going to be met. Of course, this is not the official line coming from the talks in Hyderabad. Such a decision cannot be taken until trade ministers meet in the Philippines in September. But the reality is that the talks are simply not at a stage where closure can happen so quickly, with only one more formal round in October remaining.

Instead, the November Leader’s Summit is likely to result in some sort of progress report or key deliverables statement. It is ASEAN’s 50th anniversary and pressure is on to show results.

Fortunately, movement seems to be happening in India. It is still slow and largely at the technical levels, but this is important work that needs to take place.

Officials are trying to sort out as many of these “solvable” technical issues as possible now and in October. They are also trying to categorize problems that will require political solutions to put before ministers in September. Finally, they are setting up lists of issues that are sensitive for leaders to discuss in November.

For RCEP to really move forward, leaders will need to make some hard decisions between now and November. Officials can work doggedly in far flung locations over texts and rules and schedules. But ultimately members will need to agree on compromises to get such a complex agreement over the finish line.

These compromises will need to be made by all parties involved in nearly every area of discussion. A good agreement will not provide complete satisfaction for everyone everywhere, but it should provide sufficient benefits to all parties to justify the sacrifices that will have to be made to get a deal done.

At this point, many of these compromises are not being made.

In some respects, this is typical for a complex negotiation. The tough stuff is always left until the end. There are long stretches when little moves and then a furious effort of very late nights at the absolute last minute as the final pieces of the puzzle fall into place.

But what is somewhat unusual in RCEP is that 19 rounds have now nearly passed and some basic issues are still waiting resolution. Members have not fully decided on market access modalities for goods (or, to put this is plainer English, they haven’t figured out yet how much of their markets for goods they are willing to open to one another and how much they are going to keep protected from competition). After all these rounds, they are only exchanging their second offers on goods.

Thankfully, other areas are proceeding more successfully. Officials working on rules of origin that will accompany the market access for goods, as an example, are plowing ahead without worrying about whether or not specific tariff lines will, or will not be, opened in the end.

Other areas, including more of what might be called the “newer” issues, are also proceeding much more smoothly with fewer challenges.

Hence, while RCEP is not going to be done this year, with a decent injection of political will and clear instructions from ministers and leaders, officials can proceed relatively quickly in 2018 to wrap up talks.

As with all trade agreements, of course, RCEP will not deliver all things to all people. Particularly with the diversity of members, the deal will not go as far as many had hoped. But it will lay an important foundation that helps sort out the existing complicated business environment for companies and smooth the way for better operations for firms. It should create an improved customer experience for consumers in Asia.

Building on its ASEAN foundations, RCEP is also likely to encourage further broadening and deepening of commitments in the future. This is an important pathway to trade integration for Asia that should not be ignored.

For companies, there is still time and a clear need for continued engagement. What is it that you want RCEP to deliver for you? Let us know.


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