Australia will sign on to a major free-trade deal involving 15 countries from the Asia-Pacific region, albeit one diminished by India’s decision not to join.
At the East Asia Summit in Bangkok, 15 of the 16 participants agreed to sign up to the Regional Comprehensive Economic Partnership (RCEP), likely in February next year.
Were it to include India’s massive economy, the RCEP would be the largest free-trade agreement in the world, spanning India to New Zealand, including 30% of global GDP and half of the world’s people. It was to include the 10 nations of Asean, plus Australia, New Zealand, Japan, South Korea, India and China.
But resistance from an Indian government protectionist by instinct – in particular concerned about a flood of cheap mass-produced Chinese goods hurting small businesses in its economy, and the impact of free agricultural trade on the country’s tens of millions of small-scale farmers – saw its prime minister Narendra Modi pull out.
China is keen for the RCEP to be brought into force amid the debilitating tariff war with the US. Many are keen to see New Delhi in the deal as a counterweight to China.
Australian prime minister Scott Morrison insisted there remained a “very wide, open door” available to India, should it wish to return to the deal. He met with prime minister Modi in Bangkok on the sidelines of the East Asia Summit on Monday.
“The door will always be open to India,” Morrison told reporters.
“It’s always been our view, and the view of many who sit around the table, that it is a bigger and better deal with India in it.
“I think patience is a virtue in this.”
Australia is a not a member of Asean, but is a participant in the expanded East Asia Summit grouping. Morrison said Australia was an unalloyed supporter of the proposed new free trade deal binding regional economies more closely together.
“The integration of the economy of the Indo Pacific is incredibly important for the prosperity of the region, but also its security … This is … showing a clear way forward that we see businesses in this region all dealing with each other in a much more free and open commercial environment.”
Noting a slowing global economy, a joint statement from the leaders of the 15 nations said: “RCEP will significantly boost the region’s future growth prospects and contribute positively to the global economy, while serving as a supporting pillar to a strong multilateral trading system and promoting development in economies across the region.”
The RCEP nations also said India remained welcome to return to the fold and see its massive economy as a counterweight in the deal, which could come to be dominated by China.
“India has significant outstanding issues, which remain unresolved. All RCEP participating countries will work together to resolve these outstanding issues in a mutually satisfactory way. India’s final decision will depend on satisfactory resolution of these issues.”
Also in Bangkok, at a summit run alongside the Asean and East Asia Summits, the US condemned Chinese “intimidation” in the South China Sea, alleging it has bullied smaller south-east Asian nations by militarising the resource-rich waters and seeking to control the global trade route.
The American comments on the South China Sea drew a rebuke from Chinese vice foreign minister Le Yucheng, who said it was unacceptable for countries from outside the region to come “to make waves, escalate disputes and create tensions”.
With agencies
