New Zealand and 15 East Asian countries yesterday signed up to what is being called the most important trade agreement since the creation of the World Trade Organisation in 1994; the Regional Comprehensive Economic Partnership (RCEP).
Trade Minister Damien O’Connor signed for New Zealand in the virtual ceremony.
When he was understudy to David Parker as Trade Minister in the last Government O’Connor was in charge of the RCEP negotiations.
“As a party to RCEP, New Zealand will have a seat at the governance table of this globally significant regional economic agreement,” he said yesterday.
The countries who signed are Australia, Brunei, China, Cambodia, Timor-Leste, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea Thailand and Vietnam.
Together they represent 30 per cent of all world trade.
The signing should have happened a year ago, but all the participants were waiting for India to make its mind up whether to join. Finally, it decided not to.
That was a disappointment for New Zealand, which is already linked to most of the other participants either through the Comprehensive and Progressive Trans Pacific Partnership or by bi-lateral free trade agreements.
But importantly, RCEP includes China and not the United States; another sign of the declining influence of the US within the region.
China has attached such importance to the agreement that it has been willing to eliminate tariffs from 91.5 per cent of goods exported from Japan; currently, only eight per cent of Japan’s exports to China are tariff-free.
Japnese commentary highlighted China’s concessions in the agreement.
NikkeiAsia said: “Beijing has long been reluctant to sign massive free trade agreements or participate in rule-making in such fields as intellectual property and data transfers. It kept its distance from free trade because it shunned constraints to its policies. But as tensions with the US rise, it conceded to Japan on tariffs so that it could quickly join a trade framework that excludes Washington.”
However the challenges of the Chinese market were made very visible yesterday with a Reuters report that the eastern Chinese city of Jinan has found the Covid-19 on beef and tripe, and on the packaging for these products, from Brazil, New Zealand and Bolivia as China ramps up testing on frozen foods.
The products entered China through the Shanghai port.
More than 7,500 people who may have had contact with the contaminated products and other related personnel have tested negative for the virus that causes Covid-19, a statement from the Jinan authorities said.
Chinese commentary on the signing has focussed on the exclusion of the United States.
But the Communist Party-backed Global Times, in a commentary, suggested that the Biden administration might use the RCEP to hype “China threat” in order to build consensus in the US to join the TPP again.
“The RCEP represents the failure of the Trump administration’s attempted encirclement of China in the western Pacific,” the paper said yesterday.
“The Trump administration’s jettisoning of the TPP and promotion of “America First” unilateralism have raised doubts among Asian countries about US willingness to trade with the region on a mutually beneficial basis.”
But nevertheless, the RCEP signing was welcomed in New Zealand.
The chair of the New Zealand International Business Fortum, Malcolm Bailey said NZIBF Chair Malcolm Bailey said RCEP’s strategic importance exceeded the modest market access gains, but it was good news that New Zealand achieved some new market access into Indonesia on a range of products such as sheep meat, beef, fish products, liquid milk, cheese, honey, avocados, tomatoes and persimmons.
“In addition, improved customs procedures will facilitate New Zealand exports of perishable products across the RCEP region and other commitments including in services and investment will add to the rule book for trade and investment with Asian countries,” he said.
The Ministry of Foreign Affairs and Trade in a commentary on RCEP says treatment of perishable goods will establish legally binding provisions requiring all countries to facilitate entry for perishable goods within six hours. Products include fresh seafood, fruit and vegetables.
The agreement has to be seen against the greater strategic picture in East Asia and the widespread view that the region needs to keep engaging with China rather than confronting it as the United States under Trump has been doing.
Australia has welcomed the agreement, particularly for the way it will lower barriers to trade in services and investment and its Trade Minister Simon Birmingham yesterday announced that Australia would commit $46 million to provide technical assistance and capacity building to help eligible ASEAN countries implement their RCEP commitments.
O’Connor believes that the importance of the agreement is that it brings together so many countries in East Asia.
“When the rest of the world is kind of falling apart around the rules of trade, then trying to get something in place here is incredibly valuable for us as a small player, as a country, depending upon exports for its existence and a signal to the rest of the world that we can, as a region come together, and we do see the value in having some discipline around trade,” he told POLITIK during the East Asia summit last year.
It had been hoped then that the agreement would be able to be signed before the end of last year.
But with the Covid-19 crisis redefining world trade, it is possibly entirely appropriate that it should have been signed yesterday.