Long story short: APEC’s proposed Free Trade Area of the Asia Pacific (FTAAP), the US backed Trans-Pacific Partnership (TPP), and the Chinese backed Tripartite Agreement all appear to have lost some of their thunder to the ASEAN+6’s decision to begin negotiating the Regional Comprehensive Economic Partnership (RCEP) next year.
ASEAN+6 In the Lead
It’s time for the annual Asian multilateral alphabet soup round up…
In fact, if the ASEAN+6 negotiations are substantively successful and not riddled with exceptions clauses it will create the largest economic bloc in the world, the Asian Economic Community (AEC), by 2015. A couple of the working groups have already met for a few rounds of discussions. The advantages of the RCEP in the eyes of regional developing countries and emerging markets most likely stem from the open accession format, the inclusion of all regional powerhouses under the leadership of ASEAN, and the exclusion of America’s intellectual property rights agenda.
As one might expect, the intense political tensions which have wracked East Asia in recent months have spilled over to most trade negotiations in the region. The Tripartite Agreement reportedly might be stalled because of the intense political tensions between China, Japan, and South Korea. Similarly, China is unlikely to be included in the TPP so long as Vietnam has veto power over the admission of new members. In fact, the whole point of the TPP appears to be as a mechanism to give members a slight tariff advantage over China so few if any have a strong incentive to bring China into the group. New life may be breathed back into the TPP if President Obama defeats Governor Romney in the Presidential elections. But the highly secretive character of TPP negotiations and the exclusion of Russia, China, and India in the TPP makes the initiative suspect in the eyes of the major Asian powers regardless. Japan remains an observer to the TPP and domestic protectionist pressures particularly in the agricultural sector are likely to inhibit full Japanese participation in the future.
The mystery then is why the ASEAN+6 negotiations seem to be moving forward while other agreements appear stalled. The ASEAN Secretary General, Surin Pitsuwan even noted that there was no sign of tension and even some cordial relations between the trade ministers from China, Japan, and South Korea who all sat next to each other at a recent meeting in Cambodia. China, Japan, and South Korea all gave their endorsement for the RCEP. An obvious assumption is that the ASEAN+6 agreement is highly diluted or merely a lowest common denominator agreement. However, by its own (opaque) scorecard, ASEAN claims to have achieved 67.5% of its members’ commitments toward paving the way for the Asian Economic Community in the last three years. Nevertheless, by all accounts the most contentious issues lie ahead. In particular, it remains to be seen whether the regional powers will be willing to extend to one another the kinds of bargains they have made individually with ASEAN. Perhaps the key to forging an agreement in these politically tense times is letting ASEAN take the wheel instead of any one of the major powers.