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Asean and partners want world's largest free trade deal

Asean and partners want world's largest free trade deal

A region-wide trade pact in Southeast Asia could occur before the end of the year after Asean's ten nations and their key partners agreed to "double down" on talks.

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By Jackson Lewis 07.08.2018

A region-wide trade pact in Southeast Asia could occur before the end of the year after Asean’s ten nations and their key partners agreed to “double down” on talks.

Officials at last week’s annual meetings suggested that the ongoing trade war between China and the US had increased anxiety in the region and has been a catalyst to settle on a new deal. If the pact finalizes, then the 16-country Regional Comprehensive Economic Partnership (RCEP) will be the largest of its kind in the entire world.

“All ten Asean countries and our external partners acknowledge that a multilateral, rules-based trading system, which has underpinned our progress and peace for the past 70 years, is under pressure, but, in fact, we need to double down on this principle," Singapore Foreign Minister Vivian Balakrishnan said over the weekend.

Security concerns usually take center stage at the meetings, and the circumstances were no different this time around as regional and global threats continue to pose major challenges. Balakrishnan said that Asean nations must meet these threats head on by working with each other and like-minded partners to develop stronger connections and strengthen interdependence on trade and the economy.

The specter of a full-scale trade war has loomed large over proceedings in Singapore, and leaders have been vocal in their criticism of tit-for-tat tariff measures and protectionist policies. The trade conflict is now a “real threat” to member nations and a growing concern for the year ahead.

Singapore is on good terms with both the US and China, but it is eager for the standoff’s resolution since global trade anchors its economy, which is worth three times more than its GDP. Balakrishnan added: “We've also stated that we believe in a multilateral, rules-based system. The position that Singapore takes is entirely consistent with all of our Asean members.

The fact that global trade is so important to Singapore at a time when it cannot prevent the spillover effects of an all-out war has made it look closer to home. Enhancing intra-Asean trade would give member nations a degree of control over trade and the economy.

Balakrishnan said that Asean countries have evolved and are no longer reliant on exports of raw materials and spices. Speaking of a “new age”, he added that people in the rising middle class are now becoming consumers in their own right and that new policies are necessary to support these vast changes.

Responding to a question about whether Asean could eventually become an arena for real power rivalry, Balakrishnan urged people to look beyond the competitive situation and focus on member countries becoming more united, relevant, open and inclusive. He said that all parties will welcome new trade and investments.

Trade was not the only topic on the agenda during the multitude of talks last week. Officials also discussed the denuclearization of North Korea at length, with many calling for a complete, verifiable and irreversible disarmament in the most peaceful way possible. 

There was also progress in the long-running dispute over the South China Sea following the announcement on Thursday that Asean and China have put the foundations in place to work toward a Code of Conduct (COC). While not a complete solution, it is a milestone breakthrough.

Finally, Balakrishnan spoke about the growing importance of Asean and its meetings. He said: “It has allowed us to integrate our economies; it has allowed us to lower trade barriers among ourselves. To fulfill that ultimate goal of creating a single zone for production and investment, and naturally all ten member states' economies are actually growing pretty healthily, considering the challenges that are confronting the world."

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