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Economy

Asia marks time on regional trade deal as TPP stalls

Participants negotiating the RCEP are finding it harder to come together now that the prospects for the TPP have dimmed.

VIENTIANE -- The impetus for breaking down Asian barriers to commerce has weakened, as shown by Thursday's implicit acknowledgement that a 16-nation trade agreement will not come together this year.

Leaders of countries involved in building the Regional Comprehensive Economic Partnership -- the 10 Association of Southeast Asian Nations members, plus Japan, China, South Korea, Australia, New Zealand and India -- issued a one-page statement reaffirming their commitment to a "swift conclusion" to negotiations ongoing since 2012.

But the unstated message was that they were abandoning a year-end goal for reaching a basic agreement. And not for the first time. Last year, RCEP participants pushed back the original target date of December 2015.

But the latest postponement takes place against a far different backdrop. Momentum for concluding the RCEP was running high last year, helped by an agreement on the U.S-led Trans-Pacific Partnership. Negotiations went down to the wire before participants called for more time.

Now, with the TPP facing a dim prospect for ratification in the U.S. Congress, a wait-and-see attitude has taken hold with respect to the RCEP as well, said an ASEAN diplomatic source. No new target date for concluding the negotiations was set because it would not be honored anyway, a senior Thai diplomat said. Commercial negotiations between ASEAN and the European Union have shown a similar lack of progress.

The conclusion of a major trade deal can produce a domino effect that advances negotiations on other fronts. But there is also a risk of the opposite phenomenon. With the TPP held up just short of ratification, ASEAN members are also losing their drive for a timely Asia-focused deal.

Finding common ground was always going to be hard for the 16 RCEP nations, which include China and other one-party Communist states as well as high-tariff India. With China keen on a quick agreement, and Japan favoring a quality one, much has depended on ASEAN nations' stance.

But the bloc's own views on trade are divided, with a rift separating TPP participants like Singapore and Vietnam from others  preferring a less liberal deal, such as Cambodia.

Next year marks the 50th anniversary of ASEAN's founding. Whether the bloc rallies around that milestone for another go at the RCEP will determine of speed of Asian trade negotiations going forward.

(Nikkei)

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