The Yomiuri Shimbun
Each participating nation should continue efforts to find compromises aimed at expanding free trade.
A summit meeting among leaders of nations holding negotiations to conclude the Regional Comprehensive Economic Partnership (RCEP) trade deal for East Asia has put aside their goal of reaching a substantial agreement within this year. The leaders said they aim to seal an agreement in 2019.
Sixteen nations, including Japan, China and India, are participating in the RCEP talks. The member nations account for approximately half of the world’s population and about 30 percent of global gross domestic product (GDP).
Crafting a huge free trade bloc in East Asia, a region that continues to grow economically, is significant. There are expectations RCEP and the Trans-Pacific Partnership (TPP) trade pact, which will come into force in December, will help curb the increasingly protectionist policies of the United States.
To ensure stability in the global economy, the RCEP talks must not be allowed to get bogged down. Each participating country needs to resume negotiations as quickly as possible.
Due to intensifying trade friction with the United States, many nations are becoming more enthusiastic than before about getting RCEP across the finish line. It is important to maintain this momentum for an agreement and steadily move talks forward.
A deal could not be reached at the latest summit meeting because there was disagreement over the level of trade liberalization that should be sought.
Tariffs were a focus of the talks. Participants were unable to bridge the differences between developed nations such as Japan and Australia that wanted to slash tariffs, and India, which wanted to keep any reductions to a minimum.
Japan must take lead
The developed nations also insisted on introducing strict rules to protect intellectual property rights, but China steadfastly stuck to a negative stance on this issue.
Lowering the level of trade liberalization too far would reduce the benefits participating states could gain from RCEP. It would not be sensible to dish out easy concessions in the haste to wrap up an agreement.
The TPP promises a high level of trade liberalization. Looking down the road, efforts will be needed to bring RCEP as close as possible to the agreed content of the TPP.
Elections are scheduled to be held next year in India, Thailand, Indonesia, among other nations. If leaders of these nations concentrate more on domestic considerations as they brace for elections, it could become harder for them to offer concessions that lead to the opening of domestic markets.
Stimulating economic activity in the region based on fair rules and sharing the fruits of free trade: It is vital that each nation shares this RCEP doctrine and holds further rounds of constructive dialogue.
Almost half of Japan’s trade involves business dealings with RCEP participants. Many Japanese companies also have parts and raw material supply chains that stretch throughout the region. If RCEP comes into force, Japan could reap especially large benefits.
Japan spearheaded the TPP talks after the United States pulled out of the deal. Japan must exercise leadership even in the RCEP process and serve as a bridge between India and China, which are cautious about liberalization, and other nations.
(From The Yomiuri Shimbun, Nov. 16, 2018)