Delhi Diary: US-China Tariff Tensions Add Urgency To RCEP

By Shakir Husain Bernama's correspondent in New Delhi, Shakir Husain, shares his side of the story from India. NEW DELHI, July 24 (Bernama) -- US President Donald Trump's tariffs are raising fears in Asia about more ominous global trade wars, lending urgency to conclude the Regional Comprehensive Economic Partnership (RCEP) deal. Officials at an ASEAN-India forum in New Delhi last week said concluding the RCEP negotiations this year would underscore their commitment to free trade. A new round of RCEP ministerial talks took place in Japan this month but the negotiators are grappling with a number of sticky points, including liberalisation of the services sector, e-commerce and protection of intellectual property. The proposed free tree trade arrangement between ASEAN and its six key trading partners Australia, China, India, Japan, New Zealand and South Korea is seen as a game-changer and an opportunity to reinforce Asian economic growth. "It is no doubt challenging to find common ground and comfortable landing zones amongst 16 very diverse countries, and some may be tempted to coalesce around alternative trade pacts if this process drags on, and if we do not settle the RCEP by the end of the year," Singapore's Foreign Minister Vivian Balakrishnan said in a speech. "But we believe we must stay the course, and especially given the headwinds that we currently face in the global trade environment, we are all better off together as one," he added. India is pushing for greater liberalisation of the services sector so that its professionals can have better market access within the proposed bloc. Indian Commerce Ministry Secretary Rita Teaotia said the RCEP would be incomplete if the services sector is not opened up. When concluded, the RCEP will create the world's largest trading bloc, comprising almost half the world's population and one-third of global gross domestic product (GDP). The pact underlines ASEAN's centrality in the emerging new regional economic order. Japan and China look at the arrangement as another way to counter growing protectionism in the US. For India, it represents a big stride in its "Act East" policy. "We believe that the RCEP presents a decisive opportunity to further engage our eastern neighbours economically. We hope that we can finalise the negotiations soonest possible," Indian Minister of External Affairs Sushma Swaraj said. Political optimism aside, smaller ASEAN members face acute labour movement concerns in opening up certain areas of their economy to the world's two most populated countries. It is hoped that the escalating tariff tensions between Washington and Beijing may spur compromises on the contentious RCEP issues. Trump has threatened to impose new tariffs on US$500 billion worth of Chinese goods imported by the US, having already targeted tens of billions of imports from China. The US measures are aimed at reducing the country's huge trade deficit with China. Prolonged tensions between the US and China are likely to hit major trading countries, including India and ASEAN members, that are integrated in the global economic system and a key part of the Chinese supply chain. Teaotia said the "collateral damage" from trade wars and protectionism would be far-reaching. "There will be no clear winner and losers in trade wars because everyone will lose," she told the Delhi forum. -- Edited by Rema Nambiar -- BERNAMA