World Economy

ASEAN Leaders Agree to Fast Track Trade Pact

Singapore Prime Minister Lee Hsien Loong says a mounting trade spat between the US and China is one of the most pressing concerns for Southeast Asian nations
ASEAN leaders pose for a group photograph during the opening of the 32nd ASEAN  Summit in Singapore on Saturday.ASEAN leaders pose for a group photograph during the opening of the 32nd ASEAN  Summit in Singapore on Saturday.

Southeast Asian leaders agreed to work intensively toward an agreement by the end of this year on plans to create what could potentially be the world’s biggest trading bloc.

Attempts to advance the so-called Regional Comprehensive Economic Partnership were a key talking point at a summit of the Association of Southeast Asian Nations that concluded in Singapore on Saturday, Bloomberg reported.

“We very much hope that we will be able to do it this year because otherwise events will supervene and there will be elections and the matter will fizzle out,” Singapore Prime Minister Lee Hsien Loong told reporters.

If ever fully achieved, the partnership would include the 10 Asean nations as well as China, India, Japan, South Korea, Australia and New Zealand, and cover one third of world’s economy and almost half its population.

While the pact doesn’t seek to impose higher standards in areas such as labor and environmental protection, like the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership signed earlier this year, consensus is proving elusive.

A major obstacle is India’s requirement that any agreement to reduce tariffs on goods and services should allow for free movement of people, something India wants for its highly skilled information technology sector.

While Lee could not rule out the possibility that smaller groupings could emerge if an agreement is not reached soon, he said the current intention is to include all 16 nations.

 Trade Spat

Lee said a mounting trade spat between the United States and China was one of the most pressing concerns for Southeast Asian nations. He flagged his concerns in remarks made as he opened a summit of the 10-member ASEAN, for many of which the United States and China are the top two trading partners, CNBC reported.

“In particular, the recent trade tensions between the US and China are worrying concerns,” Lee said in his opening speech for the organization’s 32nd summit.

The US Trump administration has threatened to impose tariffs on up to $150 billion of Chinese imports, and Beijing has vowed retaliation against American exports.

Lee said the open and rules-based multilateral trading system, which has backed the growth of ASEAN member states, has come under pressure as the political mood in many countries has shifted against free trade.

Lee said negotiations to finalize a maritime code of conduct covering the disputed South China Sea, where Beijing’s territorial claims overlap with those of Asean members Malaysia, the Philippines and Vietnam, will take some time.

With differing views on whether the code should be legally binding, Lee said reaching agreement wouldn’t be easy. “But it’s better that we spend our time talking about the code of conduct constructively, trying to keep the temperature down than that we don’t try,” he said.

Lee said Asean leaders welcomed the inter-Korean summit on Friday, which would contribute to peace and stability in the region, as well as plans for North Korean President Kim Jong-un to meet with US President Donald Trump. Lee said Singapore hadn’t received any formal request to host the meeting.

 Humanitarian Crisis

Lee said Asean leaders also received a briefing from Myanmar on the situation in Rakhine state where more than 600,000 Rohingya refugees have fled to neighboring Bangladesh since August.

“We encourage Myanmar and Bangladesh to press on with their shared commitment to carry out the voluntary return of displaced persons in a safe, secure and dignified way without undue delay,” Lee said.

The situation in Myanmar’s western state of Rakhine, where hundreds of thousands of minority Rohingya Muslims have fled for neighboring Bangladesh after a military crackdown, is one of the biggest challenges facing the group.

ASEAN, formed more than half a century ago, has struggled with challenges facing the region because it works by consensus and is reluctant to get involved in matters considered internal to its members.

Singapore is this year’s chair of the bloc, which includes Myanmar, Laos, Cambodia, the Philippines, Thailand, Indonesia, Malaysia, Brunei and Vietnam.

Lee said ASEAN members individually will find it difficult to make an impact on regional and global challenges, and called on its leaders to boost integration and cooperation to make a mark and to be effective.

The group is working on initiatives to jointly tackle the threat of extremism and cyber attacks, as well as to promote trade and cross-border e-payment systems.

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