Summit Dampens Hopes for RCEP Conclusion: Asean Update

A day of meetings hosted by the Association of Southeast Asian Nations cast doubt on whether the weekend would see a breakthrough in talks on the world’s largest regional trade pact.

The China-backed Regional Comprehensive Economic Partnership (RCEP) has been jeopardized by last-minute requests from India after it earlier agreed to terms. Leaders had planned to announce a preliminary deal on Monday, paving the way for countries to finalize details on the legal framework of an agreement that would cover one-third of the global economy, but the Philippines said Saturday that negotiations would now not wrap until February.

Asian business and political leaders in attendance include Japan’s Shinzo Abe, Indian Prime Minister Narendra Modi and AirAsia Group CEO Tony Fernandes. Commerce Secretary Wilbur Ross and National Security Adviser Robert O’Brien lead the U.S. delegation, which has been downgraded from previous years.

Here’s the latest (all times local):

No RCEP pact until February: Philippines (4:10 p.m.)

 

Discussions for an RCEP deal won’t be completed until February because one major country isn’t ready, Philippine Trade Minister Ramon Lopez told reporters. His comments tempered expectations that an agreement would be announced within days. He said the one country — which he didn’t identify — wanted to “have confirmation before they can totally agree.” While Lopez didn’t identify the country, Bloomberg reported this week that India made last-minute demands after having earlier agreed to terms of a deal.

Suu Kyi delivers keynote (3:53 p.m.)

Myanmar’s de factor leader Aung San Suu Kyi gave an address toward the end of a first day of meetings, saying her country was “cautiously optimistic” about its economic transition.

Myanmar isn’t at risk of economic overheating despite robust growth, she added. The country’s annual GDP growth has averaged 6-7% in recent years.

‘You go alone, you’ll be bullied’: Mahathir (2:01 p.m.)

Malaysia’s prime minister said Asean can learn from U.S. President Donald Trump on trade and that a change in U.S. leadership could lead to a better direction. Southeast Asian countries should stick together in trade disputes with the U.S. and European Union to avoid being bullied, he added.

“We don’t want to go into a trade war but sometimes when they do things that are not nice to us, we have to be unnice to them,” Mahathir Mohamad told a business summit. “Always try to speak with one voice. You go alone, you’ll be bullied.”

He said the trade war would at “the very worst” go on for five years if Trump is re-elected in 2020.

The Asean population hasn’t performed the way it should, Mahathir added. “China has double the population and they are modernizing. China has outstripped every other country to the point other people are quite jealous.”

India wants greater ambition on services: Modi (11:10 a.m.)

India’s Modi said his country wants to see greater ambition on services even as it remains “committed to a comprehensive and balanced outcome” from ongoing RCEP negotiations.

“We have put forward reasonable proposals in a clear manner and are engaged in negotiations with sincerity,” he said in an interview with the Bangkok Post. “We would like to see commensurate levels of ambition on services from many of our partners, even as we are ready to address their sensitivities.”

The prime minister added that India was clear that a mutually beneficial RCEP was in its interests and those of all partners in the negotiations. India has long pushed for other countries to allow greater movement of labor and services in return for opening its market of more than 1 billion people to certain goods.

AirAsia gaining from trade war: Fernandes (10:51 a.m.)

Business is benefiting from the U.S.-China trade battle as more Chinese people are forgoing travel to America and coming to Asia, the AirAsia head told reporters. He added that revenue from Hong Kong had dropped by 30% month on month over a period of two to three months, as protests continue to roil the financial hub.

“Any free trade is good,” Fernandes said when asked about RCEP. He could invest much more in Asean if there was a single window of entry, he said.

RCEP statement to come later (10:07 a.m.)

Thai Commerce Minister Jurin Laksanawisit said a joint statement on RCEP would be released later in the weekend, as has been expected. “That will be the shared opinion of all countries,” he told reporters.

Negotiators had met the past few days in an effort to reach a conclusion.

Region has ‘huge’ opportunities: Fernandes (9:58 a.m.)

Asean brands and companies have “huge” opportunities given global headwinds from the U.S.-China trade war, Brexit and fluctuating commodity prices, AirAsia’s Fernandes told a business conference in Bangkok. The Asean digital economy has the potential to add $1 trillion to gross domestic product by 2025, he said, but added that the region lacks a unified custom clearance.

Fernandes also said AirAsia Group would build an Asian fast food restaurant chain, opening first in Kuala Lumpur and then followed by Bangkok.

Saturday Highlights

Speeches are planned by Vietnamese Prime Minister Nguyen Xuan Phuc, Philippine President Rodrigo Duterte and Myanmar’s Aung San Suu Kyi.