US-led US-Asian pact spurs China's Asian trade bloc, S.Korea minister says

GENEVA Tue Nov 6, 2012 6:12am IST

Related Topics

GENEVA (Reuters) - China will later this month enter talks to create an Asian free-trade bloc covering 28 percent of world GDP, a reaction to U.S. progress in forming a Trans-Pacific Partnership that excludes China, South Korean Trade Minister Taeho Bark said on Monday.

The RCEP, or Regional Comprehensive Economic Partnership, will be comprised of the 10-nation ASEAN club plus six others: China, India, Japan, South Korea, Australia and New Zealand.

Its launch is to be formally announced at the ASEAN summit in Phnom Penh later this month, with a goal of reaching a deal to lower trade barriers across the region by the end of 2015.

RCEP adds to a growing web of regional and sectoral trade negotiations that has sprung up after a decade of talks failed to conclude a global trade deal, the so-called Doha Round.

The Trans-Pacific Partnership (TPP) championed by President Barack Obama's administration aims to tear down traditional trade barriers and break ground in new areas, streamlining trade between the United States and 10 other countries.

"We're organising trade relations with countries other than China so that China starts feeling more pressure about meeting basic international standards," Obama said in a presidential debate with Governor Mitt Romney two weeks ago.

Bark said RCEP had grown out of a plan to launch trilateral trade talks between China, Japan and South Korea. Some ASEAN countries, worried about the trilateral initiative, pushed for a wider deal.

"China's position on this economic integration in East Asia was pushed by TPP," Bark said in a lecture organised by the Centre for Trade and Economic Integration in Geneva.

"In the past, China didn't want to have ASEAN plus six, they only wanted plus three. Japan preferred ASEAN plus six. China preferred anything without the United States," he said.

"I don't know how much they hope to get but they want to do it because of the TPP."

SPAGHETTI

If both RCEP and the TPP came into existence, they would be similar in economic size to the European Union.

"Those are the three big blocks in the future," Bark said.

In the long run, the goal of the 21-member Asia-Pacific Economic Cooperation (APEC) group is to merge RCEP and the TPP, he said. That would bring the United States and China into an agreement to deepen trade liberalisation, succeeding where 10 years of talks at the World Trade Organization failed.

But achieving that final goal depends on RCEP achieving a "high quality" deal, not just simplifying an existing tangle of bilateral agreements, which Bark called "the spaghetti bowl".

"At this moment we are setting very high ambitions. We include all tariff lines," he said.

But many developing country members might want to water down RCEP by asking for special treatment. South Korea will demand an exemption to protect its rice farmers, while Japan is also likely to want carve-outs for agriculture.

If the signatories' squeamishness at opening their markets does not devalue RCEP, they might be forced to lower their sights in any case to meet the three-year schedule. If so, RCEP could end up having little influence on regional trade.

The trilateral talks are still expected to go ahead, although the planned launch, originally set for the Phnom Penh summit, is likely to be postponed to later in the year due to a territorial dispute between China and Japan, Bark said.

South Korea is also separately negotiating a bilateral free trade agreement with China, which would enable some 25,000 South Korean firms operating in China to supply the domestic market, rather than exporting their Chinese-produced goods as they are obliged to do now, he said.

China wanted quick negotiations, Bark said, while South Korea hoped for a bilateral deal within two or three years. (Reporting by Tom Miles; Editing by Todd Eastham)

FILED UNDER:
  • Most Popular
  • Most Shared

Reforms Plan

REUTERS SHOWCASE

Border Talks

Border Talks

India names Ajit Doval as special envoy for China border talks.  Full Article 

WTO Deal

WTO Deal

U.S. seeks to step up India trade talks  Full Article 

Phone Masts

Phone Masts

American Tower to buy Bharti Nigeria phone masts for $1.1 billion  Full Article 

Infrastructure Plan

Infrastructure Plan

India targets private cash to build railways to its ports.  Full Article 

Shadow Banking

Shadow Banking

Reserve Bank planning more measures for NBFCs.  Full Article 

Auto Sector

Auto Sector

Hyundai Motor, Kia Motors lift 2014 global sales target on China, emerging markets  Full Article 

Oil Prices

Oil Prices

Some fund managers see oil falling to $60 without OPEC cut.  Full Article 

Project Shelved

Project Shelved

Jindal Steel shelves $10 bln project after coal setback.  Full Article 

Market Eye

Market Eye

Sensex, Nifty rise to record after China, ECB stimulus boosts risk appetite.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage