KUALA LUMPUR — Trade ministers from 16 Asia Pacific countries agreed today (Aug 24) to eliminate tariffs on 80 per cent of their imports within a decade, in a major breakthrough in talks for a massive regional free trade deal.
The 10-member Association of Southeast Asian Nations (ASEAN) and China, Japan, South Korea, Australia, New Zealand and India, which have been negotiating for a trade pact known as the Regional Comprehensive Economic Partnership or RCEP since May 2013, have been bogged down by the issue of modality in goods until now.
“The biggest issue we resolved today was agreement on modality in goods, meaning the level of tariff reduction,” Malaysian International Trade and Industry Minister Mustapa Mohamed said in a press conference at the end of the ministerial meeting, adding “I consider this to be a major achievement”.
The ministers agreed that upon being put into force, no duty will be imposed on 65 per cent of tariff lines, and in 10 years it will be 80 per cent.
“Details will be worked out in the next few weeks,” Mr Mustapa said. “Our position now is for RCEP to be substantively concluded by the end of this year. There will be some technical issues which need to be resolved in 2016. We have to be realistic. Although the original plan was to complete everything perhaps by 2015, now we know that some issues might have to be carried forward. But those are minor issues.”
He said part of the problems faced in negotiations was that some countries involved do not have bilateral free trade agreements like Japan and China or China and India.
A meeting of the trade negotiating committee is scheduled for Oct 12 to 16 in Busan, South Korea.
“(We) hope that by the time Busan comes in October, countries can exchange requests and offers,” Mustapa said. He said he expects an agreement can be reached by mid-2016.
The RCEP is touted as the world’s largest free trade deal as it will cover half the world’s population and, with a combined output that stood at US$22.7 trillion (S$32.1 trillion) in 2014, accounts for almost 30 per cent of the global economy.
Last year, the total trade of RCEP economies reached US$10.8 trillion while total foreign investment inflow hit US$366.3 billion.
Efforts under RCEP have paralleled with more high-profile free trade talks on the Trans-Pacific Partnership (TPP) led by the United States.
TPP is seen as crucial for the United States to counter China’s growing influence in the Asia-Pacific region, while RCEP is one of the key platforms for China to strengthen its trade ties with other nations.
ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.