The Regional Comprehensive Economic Partnership has been under negotiation since 2012.
The 16 countries involved have made slow-going of it and several end-of-year deadlines have come and gone without a deal.
Frustrations boiled over recently with China calling on India to be booted out of the talks along with Australia and NZ.
India has been a handbrake for a while with its refusal to countenance significant opening of its own markets to imports from other RCEP countries.
However, lumping RCEP’s strongest free traders, Australia and NZ, in with protectionist India is a new development.
International media reported Japan and several southeast Asian countries oppose China’s proposal while a spokeswoman for the Ministry of Foreign Affairs and Trade said NZ will send officials to the next round of talks this month as planned.
The International Business Forum’s Fiona Cooper-Clarke said China sees India as an obstacle to getting the talks wrapped up by the latest deadline of the end of this year.
The trade war between United States and China is making India even harder to budge from its protectionist position.
“There was a concern that if Chinese exports were going to get blocked from the US where else might they go and my understanding is that India were concerned that they were suddenly going to get a big surge of Chinese exports.”
Paradoxically, China wanted Australia and NZ out because their continued demands for free trade in agriculture are too much for many RCEP countries.
“I view it as a negotiating ploy to try and stop Australia and NZ from getting too far ahead,” Cooper-Clarke said.
The biggest prize for NZ is cracking India’s complex system of tariffs and regulations keeping imports of agricultural products largely out of reach of the country’s 1.3 billion consumers.
NZ has made little progress towards this aim in trade talks with India, begun in 2010.
But 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 have made more headway.
That’s because India risked derailing the entire negotiation by not concluding talks with NZ in RCEP and losing out on the benefits for its own exporters from the larger agreement.
Cooper-Clarke said that gave NZ more leverage in its RCEP talks with India.
“India and NZ were actually doing very well in their bilateral talks but then India and China got offside with each other, which is what mucked everything up at the end of last year,” Cooper-Clarke said.
Even if RCEP can be concluded it does not mean India will immediately throw open its borders to NZ agricultural exports.
Given India’s reluctance it is likely tariff reductions will be staged over a longer period than NZ negotiators would ideally like.
Negotiators will meet for the 27th round of talks in Auckland this month.
That will be followed by a meeting of RCEP trade ministers in Beijing in August.
Trade Minister David Parker will be desperate to fend off any further attempts to suspend NZ’s membership.
NZ would have little to gain re-joining the talks later if the remaining countries agree to keep the door shut to more liberal trade in agriculture in the meantime.
Who’s in RCEP?
The 10 countries of the Association of Southeast Asian Nations (ASEAN) is Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, 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.
