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Doubts over trade pact at Southeast Asian summit due to India’s new demands

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Via Reuters Finance

BANGKOK (Reuters) – Southeast Asian leaders, worried by the U.S.-China trade war, pushed for a deal on what could be the world’s largest trade bloc on Sunday as officials worked behind the scenes to try to salvage progress following new demands from India.

Thailand’s Prime Minister Prayuth Chan-ocha addresses the Opening Ceremony of the 35th ASEAN Summit in Bangkok, Thailand November 3, 2019. REUTERS/Athit Perawongmetha

Hopes of finalizing the Asia-wide Regional Comprehensive Economic Partnership (RCEP), which is backed by China, have been thrown into doubt at the summit of the Association of Southeast Asian Nations (ASEAN) in Bangkok, Thailand.

“We should continue to work to conclude negotiations on the RCEP within this year to stimulate economic growth, as well as trade and investment,” Thai Prime Minister Prayuth Chan-ocha told the formal opening of the ASEAN summit.

He highlighted the risks of “trade frictions” and “geo strategic competition” in a region where the trade tensions between the United States and China have helped drive growth to its slowest in five years in 2019.

“ASEAN must accelerate deeper economic integration through concrete programs and projects, such as RCEP,” a statement quoted Philippines President Rodrigo Duterte as saying, adding that he voiced alarm over protectionism and the trade war.

The 16 countries in RCEP would account for a third of global gross domestic product and nearly half the world’s population.

But India is worried about a potential flood of Chinese imports. A person with knowledge of New Delhi’s negotiations said new demands were made last week “which are difficult to meet.”

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Indian Prime Minister Narendra Modi, who is in Bangkok, told the Bangkok Post in an interview he is committed to RCEP talks but added “opening the vast Indian market must be matched by openings in some areas where our businesses can also benefit.”

WITHOUT INDIA?

Some countries have raised the possibility of moving ahead without India on forming a bloc that also included Japan, South Korea, Australia and New Zealand.

But Thai commerce minister Jurin Laksanawisit told Reuters on Sunday that India had not pulled out and all was good on RCEP negotiations, a day ahead of a meeting at which the Thai hosts hope major progress will be announced.A draft final statement for the ASEAN summit seen by Reuters said the leaders would express “deep concern over the rising trade tensions and on-going protectionist and anti-globalization sentiments”.

The U.S. decision to send a lower level delegation to the summits this year has raised regional concerns that it can no longer be relied on as a counterweight to China’s increasing regional dominance. [nL8N27E6MP]

Instead of President Donald Trump or Vice President Mike Pence, the United States will be represented by Commerce Secretary Wilbur Ross and White House national security adviser Robert O’Brien.

China’s premier, Li Keqiang, met ASEAN leaders on Sunday and said China was ready to work with countries in the region for long term peace and stability in the South China Sea, where neighbors reject Beijing’s sweeping maritime claims. [nL3N27J01T]

Li cited this year’s progress on a code of conduct, due for completion within three years. A legally binding code has long been a goal for ASEAN members sparring over what they see as China’s disregard of sovereign rights and its obstruction of their energy exploration and fishing.


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