SINGAPORE: A major China-backed trade deal is at risk of losing credibility if negotiations are further prolonged, Singapore’s prime minister said on Wednesday, as Beijing said talks on the deal this week were at a “critical moment.”
The 10-member Association of Southeast Asian Nations (Asean) along with China, Japan, South Korea, India, Australia and New Zealand are trying to achieve full conclusion of the Regional Comprehensive Economic Partnership (RCEP) agreement in 2019.
The countries had hoped to reach broad agreement on the pact at this week’s summit meetings in Singapore – six years after talks began – but a final deal will not be reached until next year, at least.
“Market access negotiations have advanced substantially, bringing us closer to finalisation next year. We are now at the final stage of negotiations,” Singapore’s Lee Hsien Loong told a meeting of the leaders of the 16 countries involved in the talks.
“Further prolonging negotiations puts the RCEP at risk of losing credibility and support from our stakeholders,” Lee said, adding that businesses and citizens will miss major opportunities should the talks drag on.
Negotiations for RCEP began in 2012, which envisions the creation of a free trade zone that will encompass 45% of the world’s population and more than a third of its GDP, but does not involve the United States.
“We have come to a crucial moment now. We have to continue the momentum, so that we can wrap up the deal with the finishing touches and aim to conclude negotiations next year,” Chinese Premier Li Keqiang said in a statement issued by China’s foreign ministry.
RCEP talks were given new impetus after President Donald Trump pulled the United States out of the competing Trans Pacific Partnership (TPP) trade deal in one of the first acts of his administration.
The draft of a statement to be issued by RCEP nations later in the week, which was reviewed by Reuters, said the group would instruct “ministers and negotiators to work toward the full conclusion of the RCEP negotiations in 2019.”
Singapore’s Lee, chair of this week’s meetings in the city-state, said in September he hoped to achieve ‘substantial conclusion’ on the deal by the end of this year, but that it was not assured.
“Singapore … and several other member countries have been pushing hard,” Eurasia Group analysts said in a note on Tuesday. “However, an announcement along these lines is unlikely, as member countries have yet to agree on the broad framework for market access for goods, services and investment.”
India and Japan are among the countries with reservations about the pact, analysts and sources close to the discussions said.
Sudhanshu Pandey, an official in India’s Ministry of Commerce, said on Wednesday that India had wanted to see more progress on services, which constitute more than 50% of the GDP of most of the RCEP countries.
But he added that India supported the deal and had urged “early conclusion” of the talks.