Talking Trade blog
Solving the many sides of RCEP
Published 11 May 2017
Manila—Talks in the Trans-Pacific Partnership (TPP) negotiations were difficult. That trade agreement brought together 12 countries from three continents in an agreement that ultimately included 30 different chapters.
The TPP built on an earlier framework started by Brunei, Chile, New Zealand and Singapore. But as the membership expanded from the original 4 participants to 7 to 9 to 11 then to 12, the talks ultimately took nearly five years to conclude.
TPP members joined voluntarily. States came to the table because they wanted to sign up to advanced obligations and ambitious outcomes. The economic benefits were important. The broader strategic objectives mattered. And the final commitments helped reinforce domestic level commitments to challenging, often necessary, reforms.
Even with all these incentives, getting the final deal into place was not easy. I’ve often described the TPP as solving a 12-sided Rubik’s cube. Just when everything appeared to be lined up, the last pieces turned out to be not quite in alignment. Parts of the deal had to be unscrambled and reworked in a series of frustrating late-night meetings with trade ministers and working sessions at the end.
Now imagine the same exercise with more players. Instead of 12 side of a Rubik’s cube, the negotiators in the Regional Comprehensive Economic Partnership (RCEP) have to get a deal done with 16 sides.
These 16 players are not all at this latest RCEP round in Manila entirely voluntarily. They were, instead, drafted into the game. Some are here because they belong to ASEAN. Some are here because they happen to have an existing ASEAN trade agreement.
They have, nonetheless, sportingly been participating in this complicated exercise of maneuvering the cubes through 18 rounds of negotiations set in a sprawling set of host countries and cities around Asia.
The original plan, much like the TPP, called for building RCEP on the framework of existing agreements. In the case of RCEP, ASEAN already had five deals to choose from—the so-called “ASEAN+1s” in place.
These are five separate agreements with ASEAN’s Dialogue Partners in this RCEP exercise: with China, South Korea, Japan, India, and Australia/New Zealand.
Had all five of these agreements covered similar ground, getting RCEP finished might have been easier and quicker. But it turns out that the ASEAN+1 agreements are quite divergent.
All cover market access for goods. That is pretty much where the similarity ends. Even in goods coverage, there were variations in how many tariff lines are included, how extensively tariffs were cut, and how the rules of origin that accompany tariff cuts were handled.
Services and investment were incompletely covered across the five. Many more modern elements of a trade agreement have been missing as well.
Hence bundling the ASEAN+1 agreements together turned out to be less helpful than originally anticipated.
Finally, what any given country may be willing to do in one setting is not always what a country may be willing to do with a different set of partners.
The membership of RCEP is even more diverse than TPP ever had to contend with—from some of the least developed countries with the lowest per capita incomes in the region to some of the richest, most advanced economies on the planet. RCEP includes tiny countries and those with huge populations.
The tensions embedded in such a setting were largely set to the side early on. In the beginning phases of a complex negotiation, discussions are both abstract and smoothed by mutual enthusiasm for starting something big and important.
Now, after 18 rounds of seeing one another every few weeks, familiarity has set in. Talks are slowly grinding along and it is not possible to ignore all the difficult topics.
The RCEP process is tedious. ASEAN is “in the driver’s seat” for these negotiations. This means that for every round, in every working group, the 10 members of ASEAN first get together to “caucus” for up to a full day. The other 6 parties may (but usually don’t, at this point in the talks) also do the same. Then the talks begin in earnest with all 16 countries engaged in each specific working group. This process is repeated for each of the roughly dozen or more working and sub-working groups in RCEP.
After each round closes, all 16 parties return home to discuss progress with officials in the capitol cities. The next full round is set for July when the whole thing starts again and more than 850 officials will gather together once more across roughly 10-12 days. In between now and then, some officials will meet in what are called “intersessionals” to haggle over specific issues.
ASEAN’s track record strongly suggests that the Rubik’s cube of RCEP is unlikely to be fully solved before negotiations close. This is particularly true if the goal is to announce some sort of solution by the end of this year, when ASEAN has its own 50th anniversary to celebrate. The gap between progress now and getting the final rows of the puzzle into place is significant.
But this is not necessarily a cause for despair. ASEAN also has an admirable record of continuing to work after a victory has already been declared. As they often say in the region, it’s the process, not necessarily the destination, that matters.
Of far more importance is maintaining the objectives of higher quality in commitments.
Since work is likely to continue towards solving the final row of the puzzle later, what really matters is locking in progress in cracking most of the solution. Getting the final row done feels very satisfying, but more critical is working out how to get the lion’s share of the rows into place.
This is true even if it turns out that the final rows can’t be slotted into place using the existing directions for solving the puzzle. It will still push forward trade across Asia in ways that have not been tried in the region before and deliver solid economic benefits to companies and consumers.
Getting to the end, however, remains a challenging goal. Solving a “normal” Rubik’s cube with three sides is hard enough. Completing one with 16 sides is testing the patience and negotiating skills of everyone involved.
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