THE TTALK QUOTES 

On Global Trade & Investment

 

Published Three Times a Week By

The Global Business Dialogue, Inc.

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No. 75 of 2014 

TUESDAY, NOVEMBER 4, 2014     

 

   

Filed from Portland, Oregon  

     

Click here for last Friday's RMB quote from
Perrin Beatty of the Canadian Chamber of Commerce
AN RCEP VISION

"RCEP is not only or mainly about broadening trade liberalization but also about building frameworks for regulatory cooperation and investment in infrastructure to facilitate economic integration in East Asia, including with India."

Peter Drysdale
November 3, 2014 (publication date)
CONTEXT
To begin with some definitions, RCEP is the Regional Comprehensive Economic Partnership, and one of the more important free trade agreements being negotiated today.  And that's saying something.  The sixteen participating countries formally launched their negotiations at the ASEAN Summit in Cambodia in November 2012 and set themselves the goal of a finished agreement in 2015.

Peter Drysdale is Emeritus Professor of Economics at Australian National University.  According to his biography on the University's website, Professor Drysdale "is widely recognized as the leading intellectual architect of APEC."

Today's quote is from a Xinhua article, which highlights Professor Drysdale's views on the various trade negotiations in the Asia Pacific on the eve of this year's APEC meetings in Beijing.    USTR Michael Froman is due to leave for China on November 6.  President Obama will depart shortly thereafter on a trip that will take him to China, Burma, and Australia.  The APEC ministerial meeting is set to begin on  7th, and the Leaders' meeting is slated for the 10th and 11th. 

Many if not all of APEC's 21 members are involved in one or more FTA negotiations, and almost certainly some of these will move forward over the next couple of weeks, in one Beijing setting or another.  That includes APEC's own long-term goal of a Free Trade Area of the Asia Pacific (FTAAP), but with a caveat.  

The caveat was highlighted in an eye-catching Wall Street Journal story on FTAAP.  The provocative first paragraph announced:

"The U.S. has blocked China's effort to use a leaders' summit to begin negotiations on a free trade zone spanning the Pacific, people close to the matter said. ..."

Assuming that assessment is correct, USTR nevertheless seemed to be making an effort to soften the blow.  Today's Morning Trade from POLITICO quoted a USTR response to the Journal's story to the effect that the U.S. is working with China on a "constructive" plan for advancing a Free Trade Area of the Asia Pacific.

Professor Drysdale also seemed to be responding to The Wall Street Journal's report when he told Xinhua:

"Some see the goal of a Free Trade Area of Asia and the Pacific as immediately important, but that is a long term goal that can only easily be achieved after RCEP has been completed perhaps alongside the Trans-Pacific Partnership (TPP), which has proven more difficult to negotiate than expected."

Finally, a note on the RCEP players.  The sixteen countries negotiating this agreement are the ten members of ASEAN plus six others.

ASEAN is the Association of Southeast Asian Nations, and its members are Indonesia, Malaysia, the Philippines, Singapore, Brunei, Vietnam, Laos, Burma, and Cambodia.

The six others are: China, Japan, South Korea, India, Australia, and New Zealand.

We assume they are all going to be in Beijing next week. No, India is not a member of APEC, but President Xi has invited Prime Minister Modi to attend, and we expect he will be there.

COMMENT
The Wikipedia entry for RCEP is quite good if somewhat anodyne.  It says for example that:

"TPP are RCEP are mutually reinforcing parallel tracks for regional integration."

That's terribly diplomatic and true as far as it goes, but it needs to be read in conjunction with, say, Michael Wesley's excellent piece in "The Conversation," which includes these straightforward observations:

"The key fact about TPP and RCEP is that each excludes one of the world's two largest economies. China is not party to the TPP talks.  The U.S. isn't part of RCEP negotiations.  This is a pretty clear sign that it's all not just about free trade and good will.  It's about TPP versus RCEP, as trade agendas become a major vehicle in the growing strategic competition between Washington and Beijing."

And, he might have added, RCEP has the advantage of being simpler, with less intrusive (less "ambitious") rules to be worked out.

Conclusion.  Negotiations on both RCEP and TPP will continue long after next week's APEC meetings in China.  Yet in ways that it may be hard for outsiders to measure, both will evolve during this coming week.  Our hope is that that evolution does not reinforce Professor Drysdale's softly stated view that TPP may be losing credibility, losing ground in its unofficial race with RCEP. 
SOURCES & LINKS
RCEP, A Priority is a link to the Xinhua/Daily Times story that was the source for today's featured quote.

Peter Drysdale takes you to a biographical note about this economist on the website of Australian National University.

FTAAP, U.S. Blocks China's Efforts is the Wall Street Journal story on this development cited above.

Wikipedia on RCEP is a link to this article.

Who Calls the Tune? Is a link to the Michael Wesley article quoted in the Comment section above.



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