Free trade has become an easy target for countries frustrated with unequal growth, said Senior Minister of State Dr Maliki Osman.
Citing Brexit and the ongoing US-China trade spat, he said on Monday (Nov 26) that the unequal fruits of free trade have frayed global consensus on economic integration and globalisation.
“The problem is that the fruits of free trade have not been shared equally,” said Dr Maliki.
“Combined with the ongoing narrative of the ‘Asian century’ and ‘the rise of the East’, some have concluded that the welfare gains that would have otherwise accrued were flowing elsewhere.”
He further affirmed the need for multilateralism, and emphasised ASEAN’s importance as a necessary pillar in the region amidst a shifting geopolitical landscape.
“For ASEAN, our response has been to reaffirm our commitment to the free, open and rules-based multilateral trading system; and put in place tangible measures to ensure that the benefits percolate to our people, and that our people stay relevant.”
The comments were part of his opening remarks at Monday’s 33rd ASEAN Roundtable organised by the ISEAS-Yusof Ishak Institute.
In his speech, he also lauded ASEAN’s progress in other areas like counterterrorism and cybersecurity, but emphasised the need for ASEAN unity ahead of crucial elections in Indonesia and Thailand next year.
Quoting from Singapore’s founding father Mr S Rajaratnam, he concluded that “if we do not hang together, we will hang separately.”
Dr Maliki’s words come on the back of rising global trade tensions, and an ASEAN summit that saw the timeline for the much anticipated Regional Comprehensive Economic Partnership (RCEP) pushed back another year.
If concluded, the 16-country RCEP – which comprises 40 per cent of world GDP and 45 per cent of global population – will become the world’s largest trade pact, surpassing the likes of the EU single market.
As the main drivers behind the deal, it will also solidify ASEAN’s credentials as a unified regional body and an exemplar of multilateralism, at a time when some countries are becoming increasingly insular.
“RCEP countries are committed to concluding negotiations by next year”
The mega deal includes all 10 ASEAN countries, and while initially sluggish, negotiations have gathered pace in recent years.
But despite the “substantial progress” noted at the 33rd ASEAN Summit earlier this month, leaders at the summit played down talk of a swift resolution, instead setting out 2019 as a target for completion.
The most recent timeline adjustment is one in a long series of delays that have become all too familiar. Indeed, there was hope that the deal could have been concluded as early as last year, in conjunction with ASEAN’s 50th anniversary and the first RCEP summit, but that failed to materialise.
Even as recent as August, Minister for Trade and Industry Mr Chan Chun Sing remarked that “broad agreement” would be reached come November.
While he acknowledged the difficulties, Dr Maliki cited the success of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) as cause for optimism.
“This (RCEP) is not the first negotiation of any agreement; we have had many other experiences in negotiating other agreements.
“When CPTPP was threatened early last year due to the withdrawal of the US, everyone thought it was the end. But the 11 countries came together. Nobody would have believed that within a year we actually are able to sign, ratify and implement it by 31st December this year.
“We have made substantial progress and I think the countries in RCEP are committed to concluding negotiations by next year.
Why has RCEP taken so long?
There are multiple factors at play. Issues like the investor-state dispute settlement (ISDS) have proven thorny, with countries like Australia – which won a lawsuit against tobacco giants Philip Morris last year – voicing concern.
In addition, ASEAN’s proposal for the inclusion of 92 per cent of goods have also led to stalling talks in recent months, with India unwilling to make certain compromises on market access to China due to trade deficit concerns.
Certainly, given the initial flurry of excitement since it was mooted six years ago, RCEP has flattered to deceive on many fronts. Its early promise has been dulled by regular hurdles that observers fear will push it into the kind of development hell that saw the Trans-Pacific Partnership (TPP) collapse on its sword.
However, the collapse of the TPP and growing trade tensions have once again highlighted RCEP’s importance and placed it high on the ASEAN trade agenda. It is the same tension that has spurred the rapid adoption of the CPTPP, which will come into effect next month.
Cause for optimism?
For the RCEP, the end-of-year report book shows signs of optimism. Negotiators have so far concluded seven out of 20 chapters this year, with a couple others close to completion.
Given this encouraging trajectory, a completion of the deal by 2019 could well be on the cards, though further delays would not surprise many due to the scale and complexity of the arrangement.
But even if it does spill over to 2020, there is reason to believe that negotiations will have built up enough steam by then to carry it over the line before the turn of the decade.
Speaking at the Roundtable, Ministry of Trade and Industry representative Ms Alpana Roy noted the substantial urgency displayed by all parties over the year, but insisted that delays should not be viewed negatively.
“I think a number of questions have arisen over the course of the year with reference to this idea of substantial conclusion. That was the target that we set for ourselves…but not reaching substantial conclusion in itself is not a bad thing.
“When we negotiate among ourselves we realised that we need a little bit more time for each of us – especially in market access – to get to a level that will generate the most benefits for countries and stakeholders.
“Overall we had very good outcomes this year and the prospects for conclusion next year are there.”