China trade pact stalls as Trump tariffs feed backlash from India

Bloomberg

A Chinese push to conclude a new Asia-wide trade agreement this year is running into opposition from India fed partly by concerns over the fallout of Beijing’s deepening trade war with the US.
The 16-country Regional Comprehensive Economic Agreement (RCEP) is the Beijing-backed rival to the Trans-Pacific Partnership (TPP), a vast regional pact once led by the US that Donald Trump withdrew from early in his presidency.
Together with the Belt and Road Initiative to build investment and trade links with countries along the old Silk Road to Europe, RCEP is a key element in China’s efforts to seize the geopolitical advantage following what many in the region see as a US retreat under Trump. Beijing’s struggles to close the deal on a trade bloc that would cover almost half the world’s population illustrate the continuing suspicion among its Asian trading partners.
China has been pushing for RCEP leaders to announce the ‘substantial conclusion’ of the deal at November’s East Asia Summit in Singapore, a goal that leaders committed to this year. That push has gained a new urgency in recent months as the tariffs war between Beijing and Washington escalates.
At a ministerial meeting in Singapore, however, India continued to resist pressure to make a more ambitious commitment to lower its tariffs on imported goods, according to regional trade officials. Likewise, other countries stopped short of offering the sort of opening up of their services sectors and commitments to rules allowing the free movement of professionals in the region that India has been seeking.
According to a statement issued after last weekend’s ministerial by Indonesian trade minister Enggartiasto Lukita, who is chairing the negotiations, just four of RCEP’s 21 rules chapters have been concluded, while another five or six could be completed this year. But that requires changes in attitudes from all member countries to find solutions, Enggar added.
The market access offers of some participating countries were also ‘still considered insignificant by the majority of participating countries,’ he said.
All parties exchanged thorough discussions at the talks and reiterated that they would push for a basket of deliverables by the end of this year and substantially finish the negotiations, Gao Feng, spokesman at the Ministry of Commerce, said when asked about whether RCEP can be wrapped up this year.
New Delhi doesn’t see the RCEP negotiations concluding this year, a government official had told reporters last month.
RCEP negotiators began a 24th round of talks in New Zealand on October 18 that’s due to continue through the end of next week. But ministers made clear after their last meeting that plenty of work remains and that wrapping up RCEP by the end of this year is unlikely.
The stalemate appears unlikely to be unwound any time soon as RCEP member countries like Australia, India and Indonesia go into elections next year. That raises questions about the longer-term prospects for RCEP, which began life as an effort by the 10-country Association of South-East Asian Nations to bring its individual trade deals with China, India, Japan, South Korea, Australia and New Zealand under one umbrella.
Among the issues surfacing in the negotiations, according to officials, are concerns being expressed by India and others over what the US-China trade conflict could mean for other countries in Asia. While some countries such as Vietnam are hoping for a potential boon as companies move supply chains out of China to avoid US tariffs, others are concerned that Chinese goods kept out of the US by tariffs could end up being diverted into other markets.
Some in the region remain optimistic that a deal can be made and that leaders gathering in Singapore next month can announce at least significant progress towards an accord.

“If there is a sense of urgency now, it is because we have spent so much time and energy. The glass is half full now, no turning back,” said Iman Pambagyo, Indonesia’s top RCEP negotiator.
Mari Pangestu, a former Indonesian trade minister who now teaches at Columbia University, is also optimistic. “This is the Asian way. As long as there is progress you continue the process and you can ratchet it up or make it more ambitious later,” she said. “The world is in need of good news. We need to send a signal that, whatever is happening in the world, Asia is continuing the process of opening up.”