Trade ministers representing the 16 countries negotiating the Regional Comprehensive Economic Partnership (RCEP) gathered last month in Beijing as they try to meet their own end-of-year deadline to finally complete talks started seven years ago.
It’s been nervous times for exporters eager for a boost from RCEP with international media in July reporting pressure from China to have NZ, India and Australia booted out of the negotiations.
China had reportedly reached its limit with India’s continued unwillingness to open up its markets to increased imports from other RCEP countries.
At the same time China was reported as being frustrated with NZ and Australia’s demands for free trade in agriculture, which it was concerned went too far.
Agriculture Minister Damien O’Connor, deputising in Beijing for Trade Minister David Parker, said he saw no evidence China wanted anyone excluded.
“The negotiation by its nature is an attempt to get compromise from all parties to reach enough common ground to sign an agreement that is useful for everyone.
“Certainly, some progress has been made and is getting close to the point where not everything will be agreed but enough to form the basis of a sound agreement.
“And there is optimism that this can occur by the end of this year while final signing may move into next year.”
O’Connor said there have been commitments from most countries in the negotiations to improve access for agricultural imports but India remains a tough nut to crack.
The country of 1.3 billion consumers operates a complex system of tariffs and regulations keeping imports of agricultural products largely shut out except for brief periods where local demand exceeds supply.
Outside of those periods tariffs on milk powders range between 30% and 60%. The tariff on sheep meat is 30%.
NZ and India began their own free-trade talks in 2010 but made limited progress before the two countries began negotiating under the aegis of RCEP.
Reflecting a different negotiating dynamic where each of the countries involved must reach a deal with every other country before an overall deal can be concluded the talks between NZ and India in RCEP are understood to have made more headway.
However, there is still some way to go before the two sides can agree and, in particular, on what is an acceptable opening up of the market to imports of sheep meat and dairy products, O’Connor said.
“The offers are still, in our view, not satisfactory and we want to continue to talk to them.”
It is also likely RCEP will include longer phase-out periods for tariffs than exporters are used to in many of NZ’s other trade deals.
“We will make progress in lowering the barriers to trade over time and this agreement will achieve that (but) it will not be in one fell swoop,” O’Connor said.
However, even if NZ and India can agree, exporters here will not reap gains until the RCEP enters into force and that cannot happen until all 16 countries have agreed their own deals with each other.
Close watchers of the talks say a diplomatic dispute between two key participants, South Korea and Japan, is worsening by the day and could yet tip up the wider deal.
Who’s in RCEP?
The 10 countries of the Association of Southeast Asian Nations (ASEAN), Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam as well as China, Japan, South Korea, India and Australia and New Zealand.
Those 16 countries account for 39% of the world economy making RCEP the largest regional trade deal ever to be negotiated.
By comparison the 11 countries in the Comprehensive and Progressive Trans Pacific Partnership account for just 13.4% of global GDP.
NZ already has free-trade deals with the ASEAN countries, China, Australia, Japan and South Korea but not with India.
As well as its first-ever deal with India it is hoped NZ can improve on those already in place with the other RCEP countries.
