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What is the RCEP?

Written By: - Date published: 3:55 pm, August 15th, 2018 - 14 comments
Categories: david parker, Economy, Globalisation, International, trade - Tags:

It’s time we paid attention to RCEP, the Regional Comprehensive Economic Partnership.

RPTPP was tough; this is even tougher.

It’s a proposed trade agreement between Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, Australia, China, India, Japan, South Korea and New Zealand.

If agreed, its countries would account for about half of the economic output of the world.

The guiding principles for the agreement were set way back in 2012.

They completed negotiating round 22 in Singapore in March, had further talks in July, and they are pretty ambitious in the agreement timeline for this year.

Clearly this comes as the threat of a global trade war looms after the United States imposed tariffs that affect imports from China, Europe, Turkey, and Canada, among others.

I can’t yet figure out how RCEP overlaps with CPTPP. Perhaps we have some trade experts among us who can assist. An agreement would sure one in the eye for the United States, who appears keen to isolate itself from international diplomacy and international trade frameworks as quickly as possible.

There is a push for some kind of agreement to come out of the ASEAN Summit in Singapore this coming November. Although there’s a chance that India will pull out before that.

They want tariff cuts to be ambitious and include products categories that are actually traded among parties.

They want rules of origin to be consistent across all 16 members and be helpful for companies. ROOs should allow firms to choose from regional value content (RVC) or changes in tariff heading.

They want an emphasis that trade facilitation is critical for firms. Customs procedures are as important for companies as tariff reductions and ROOs. RCEP is intended to promptly and fully implement the Bali TFA agreement.

As ever, New Zealand is seeking commercially meaningful access for goods, services, and investment. We also want modern rules which address contemporary business priorities, such as facilitating participation in regional supply chains and the use of electronic commerce. And we want ongoing cooperation mechanisms to support implementation and contribute to economic reform in the region. And (ahem) anything for dairy would be appreciated.

It is understood that some of the hurdles include e-commerce, intellectual property and market access to sectors such as agriculture. Sure hope we do better on agriculture than the last one.

You get a sense of our governments’ thinking between CPTPP and RCEP in this speech from Minister Parker from June this year.

However no official draft agreement has ever been put out to the public despite as usual transnational corporations getting regular briefings and opposing NGOs and civil society groups being shut out like all other citizens. Pretty hard not to be sceptical.

Now, I know there’s a lot to keep up with including the EU one, and the “Trade Conversation” that the government has set up is rolling through the country. But as with the China-NZ FTA, this big diplomatic effort confirms again that Asia is New Zealand’s social and economic destiny.

14 comments on “What is the RCEP?”

  1. Draco T Bastard 1

    Just another ideological tool to screw over the small people in all the signing countries.

  2. Wayne 2

    It is highly unlikely RCEP will be as comprehensive as CPTPP. Too many of the key negotiating nations, especially India, have large sectors of their economy they wish to protect from foreign competition.

    It has always been clear that RCEP would struggle to be as comprehensive as CPTPP, although CPTPP has now raised the bar for RCEP.

    New Zealand will sign up. The PM’s extended conversation will have no impact in that regard, that is, it won’t slow Ne Zealand’s involvement in the RCEP. Her purpose is to sell the benefit of this and similar agreements to the skeptical left, in short her own supporters. It might encourage the trade negotiators to be more open, which as much as anything seems to concern those who might be skeptical.

    • Ad 2.1

      It would be a first step if the draft near-complete texts were made public. At very least show the tradeoffs.

      It would be a second step if our Parliament had a meaningful voice in deciding whether to sign up or not.

      It would be a strong step if the government actually articulated a clear economic pathway that showed the necessity for such rule-based trade agreements for New Zealand.

      While that won’t placate the anti-trade slivers of the activist left, it would at least make for a coherent discourse. Which we don’t have now.

    • KJT 2.2

      In other words. The wishes and interests of the majority of New Zealanders, will not be allowed to change a foregone conclusion, by Government.
      And. You claim we are a democracy.

  3. Stuart Munro 3

    It’s likely to be much better received than the TPP and its variants – the absence of the US means much less aggressive corporate provisions, and the absence of their agricultural lobby makes things possible for our traditional export mix. Our only real competitor there is Australia, and they don’t completely outweigh us.

    The decision to allow the sell off of increasing amounts of agricultural land mean however, that the real benefits that might accrue to NZ are less than they would have been, and, as such land continues to leave local ownership, these benefits will reduce still further over time. One result will be increasing public resistance to horse trades for deals which, like the TPP, offer no benefits whatsoever to most New Zealanders, but come at an appreciable cost.

    The public probably want to see evidence of meticulous consideration of alternatives to negotiated agreement (BATNAs) more than they want patronizing piffle along the lines of Tim Groser’s remarks about breathless children. The agreement he signed off was so flawed he must have been drunk. The CPTPP is a great improvement but for the simplistic belief that ISDS are not going to cost us more than the extremely meagre benefits the rest of the agreement offers.

    • Ad 3.1

      Thanks Stuart that’s helpful.

      • Stuart Munro 3.1.1

        It’s a good post.

        This trade deal is more natural for us than the TPP – Asia substantially doesn’t make what we produce, the US does; so the old economic chestnut local advantage doesn’t return much there.

        Of course, had the Gnats been half as clever as they like to pretend they’d’ve cut a deal with Mexico, getting our products access under NAFTA without giving the US corporations anything.

        • Gosman 3.1.1.1

          Ummm… pretty sure that is what TPPA or CPTPPA or what ever included both Canada AND Mexico.

          • Stuart Munro 3.1.1.1.1

            Way to miss the point.

            Mexico would not have attacked Pharmac or our copyright laws or required ISDS.

            We’d’ve had all the (mostly illusionary) benefits of US market access without the costs or egregious assaults on our sovereignty.

            A bit like Australia’s Japan deal, that Groser was too up himself to clone.

            • Gosman 3.1.1.1.1.1

              We have ISDS in many of our FTA. Why wouldn’t Mexico want one of those?

              • Stuart Munro

                We’re not crucial to each other – neither one needs to strong-arm the other. And, if they were silly about it we would just walk away.

                Mexico also lacks comparable agriculture – so the protections Canada and the US required would not have been imposed upon us.

                By taking the role of the US’s stool pigeon, Gnat negotiators cost NZ a great deal – they pursued personal rather than national advantage, and returned a distinctly subpar result.

  4. corodale 4

    “Professor Kelsey said that plans are underway to launch an independent process for developing a genuinely progressive trade policy to coincide with New Zealand’s hosting of an RCEP negotiating round in late October.”

    http://www.scoop.co.nz/stories/PO1806/S00240/trade-for-all-in-the-eu-nz-fta-offers-no-new-direction.htm 21 June 2018

  5. Bill 5

    And of course, as with any trade deal these days, physics is at the top of the agenda.

    As such, everything stands or falls on the likely or potential amount of any embedded carbon accompanying the proposed provision of various product or services.

    What’s that you say?

  6. veutoviper 6

    A good post, Ad – and quite relevant in terms of the recently announced Government initiative Trade for All.

    I do not claim to be an expert on trade agreements despite growing up many decades ago as the child of a NZ trade commissioner with a considerable part of my first 20 years spent living and being educated overseas – and as unpaid child labour helping cook and serve NZ legs of lamb and other forms of NZ primary exports and sitting through endless boring dinners etc where the talk was all trade! LOL. The first half of my career also included working in the area of international negotiations and agreements, albeit in areas other than trade but indirectly related to trade.

    As my views on trade agreements thus differ from many on here due to my ‘experience’ – or some would say indoctrination/brainwashing! – I tend not to participate in discussions here on these issues. However, I have the impression that some understanding is lacking of the complexity and overlapping of many of these bilateral and multilateral agreements. This is quite understandable and my comment is not intended as criticism.

    I note that the two links in your post to the RCEP are (1) to Wikipedia, and (2) to the website of the Australian Department of Foreign Affairs and Trade (DFAT) – and none to NZ sources.

    The NZ Public Service Ministry and Departmental websites are a mixed bag, but the NZ Ministry of Foreign Affairs and Trade (MFAT) website is IMHO one of the best and contains an expansive and informative section on trade, trade agreements etc.
    https://www.mfat.govt.nz/en/trade/

    I am sure that many here will disagree with some of the ideology, principles etc expressed on the website re trade, but putting these aspects aside, the website is a useful information source on NZ trade relationships with other countries and areas, both bilateral and multilateral – and the overlap and interconnection of these agreements and negotiations.

    This section includes separate sections on Free Trade Agreements in force, those agreed but not yet in place (eg the CPTPP), and those under negotiation (eg the RCEP). The latter also includes documents relating to the many rounds of negotiations to date.

    https://www.mfat.govt.nz/en/trade/free-trade-agreements/

    https://www.mfat.govt.nz/en/trade/free-trade-agreements/agreements-under-negotiation/rcep/

    https://www.mfat.govt.nz/en/trade/free-trade-agreements/agreements-under-negotiation/rcep/regional-comprehensive-economic-partnership-negotiating-rounds/

    As mentioned above, the recent Trade for All initiative has resulted in this website now having been expanded extensively to cover: How MFAT consults on trade; Public Consultation on Trade, with procedures for, dates and details of public consultation events throughout NZ on trade negotiations; and Consultation with Maori.

    https://www.mfat.govt.nz/en/trade/nz-trade-policy/how-do-we-consult-on-free-trade-agreements/

    https://www.mfat.govt.nz/en/trade/nz-trade-policy/public-engagement-on-trade/

    https://www.mfat.govt.nz/en/trade/nz-trade-policy/consultation-with-maori/

    Ad, I think you may find that these new sections cover some, if not all the issues you raise in your 2.1 above. As I say, not all, and no doubt there will still be hiccups and disagreements etc but in my opinion this is a good first step forward.

    Hope this helps.

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