<p><span style="line-height: 1.5em;"><div class="KonaFilter image-container float_right"><div class="image on-image"></div><p></p></div>Japan tried to negotiate the first trans-Pacific trade agreement exactly 400 years ago. It sent a robed samurai, Hasekura Tsunenaga, to Europe via Acapulco to request the right to trade directly with New Spain (today's Mexico). </span></p>
<p><span style="line-height: 1.5em;">Among other things, he needed permission from the pope. But because the shogun was slaughtering Catholics at the time, he did not get it.</span></p>
<p>Only in the past decade have such agreements finally started to flourish. But they are still dominated by interests that go beyond the nuts and bolts of trade and into the realm of geopolitics. America and China are pursuing three separate tracks towards trade pacts that would help define the future of trans-Pacific commerce. One of the three does not include China, another excludes the United States. The third is still pie in the sky.</p>
<p>All three involve unwieldy acronyms, though whichever wins could one day become as familiar as NAFTA (the North American Free-Trade Agreement). The furthest advanced is the American-led Trans-Pacific Partnership (TPP), in which China plays no part. On a parallel track, though further behind, is the Regional Comprehensive Economic Partnership (RCEP), which covers only Asian countries and includes China, plus several countries that are also negotiating the TPP.</p>
<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"></div><p></p></div></div><span style="line-height: 1.5em;">The distant dream is the Free-Trade Area of the Asia-Pacific (FTAAP), which would include both America and China, and possibly cobble together elements of both TPP and RCEP. China pushed the FTAAP ahead of the 21-country APEC summit in Beijing in November, giving a new lease of life to an old idea.</span></p>
<p>Peter Petri and Ali Abdul-Raheem write in a new paper for the Pacific Economic Co-operation Council: "Nearly 50 years after it was first proposed, it is gaining traction due to the emergence of RCEP and TPP initiatives and the continuing stalemate in global trade negotiations."</p>
<p><span style="line-height: 1.5em;">As trade experts see it, the TPP is the most ambitious in the short term. It is dominated by America and Japan and also includes Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Together these countries account for about 40% of global GDP, making it one of America's biggest potential free-trade agreements (FTAs). The Obama administration hopes that it would be complemented by an even more ambitious agreement with the EU.</span></p>
<p>America, which already has FTAs with six other TPP countries, sees opening up Japan as the big prize. But the TPP is not just aimed at dismantling tariff barriers. It is also meant to tackle tough issues such as intellectual property, services, government procurement, labour and environmental standards. Since its members include economies such as Vietnam and Malaysia whose supply chains depend on cheap labour, negotiations were always likely to be tricky.</p>
<p><span style="line-height: 1.5em;"><div class="KonaFilter image-container"><div class="image on-image"></div><p></p></div>When Japan, which likes to spoil its farmers, joined in 2013, they became even trickier. But after 19 rounds of negotiations, considerable progress has been made. There is a strong push to finish it by the end of this year, though a similar deadline last year was missed.</span></p>
<p>RCEP, which is led by ASEAN, has the unenviable task of bringing China and Japan to the same table. It is more focused than TPP on market access and on smoothing the way for supply chains. But it includes foot-dragging India, and may suffer from ASEAN's softly-softly way of negotiating by consensus.</p>
<h3>Aim higher</h3>
<p>Michael Froman, America's trade representative, says the TPP is about ensuring high labour standards, exposing state-owned enterprises to level competition with private enterprises and including digital activity "to ensure a free and open internet". When he held informal talks with TPP counterparts at a get-together in Myanmar in August, he asked them about RCEP and was not impressed by what he heard. Whereas the TPP was aiming to eliminate almost all tariffs, India was asking RCEP to keep the figure as low as 40%. China was somewhere in between, apparently waiting to see where everyone else ended up.</p>
<p>Predictably, in the run-up to the 21-country APEC summit in Beijing this month, America and China have also been at odds over the FTAAP plan being promoted by the Chinese. Wang Shouwen, China's deputy trade minister, has memorably described the TPP and the RCEP as "two wheels of a bicycle", and the Obama administration has been heartened to find that the Chinese government no longer dismisses the TPP as an anti-China ploy.</p>
<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"></div><p></p></div></div><span style="line-height: 1.5em;">But APEC insiders say that American officials have opposed China's plan for an FTAAP feasibility study, and they disagree over timing. As one official says, America is "dead set on achieving a breakthrough on TPP" and does not want to be distracted by FTAAP.</span></p>
<p>They also differ over which should be the FTAAP's main building block. Eventually America would like to bring China into the TPP and use that as the basis for a highly sophisticated trans-Pacific FTA. But China will be reluctant to accept American rules on things like state-owned enterprises and internet access. Going down an RCEP route would give it more say.</p>
<p>Messrs Petri and Abdul-Raheem think that a trade agreement between America and China would bring big gains, whatever the route. But they reckon that a more rigorous TPP-style model would bring economic benefits worth almost $1 trillion more than one based on RCEP, though it would be much harder to persuade China to go along with it.</p>
<h3>Crossing the Ts</h3>
<p>Yet the TPP itself still has huge hurdles to overcome, mainly political rather than technical. The Obama administration's main headache--some say self-inflicted--is another acronym, Trade Promotion Authority (TPA). This enables the American government to negotiate free-trade agreements without having them picked apart afterwards; Congress can only validate or reject en bloc what has been negotiated.</p>
<p>Once called "fast track", TPA lapsed for new trade agreements in 2007. Since 2012 the White House has been seeking renewal, but even its own Democrats on Capitol Hill have stonewalled.</p>
<p>Japan's obstacles are more elegiac than TPA, but just as stubbornly entrenched. They have to do with rice and other "sacred" products of the land, such as wheat, beef and pork, dairy and sugar. Japanese farmers are few and far between, and most of them are getting on in years, but as guardians of the nation's most cherished harvests they yield to no one.</p>
<p><span style="line-height: 1.5em;"><div class="KonaFilter image-container float_left"><div class="image"></div><p></p></div>Backed by JA, a vast Tokyo-based farm lobby, they have spent their lives resisting efforts to lower tariffs on such products. Richard Katz, an economist, says that their rural toils produce just 0.8% of Japan's GDP, yet they match America's Congress in holding TPP hostage.</span></p>
<p>In September, just days after Mr Abe reiterated in America that TPP was crucial for raising Japan's agricultural competitiveness and helping it adjust to an ageing society, TPP talks between the two countries abruptly broke down. Each side blamed the other, though Americans continue to suspect that the problem is not Mr Abe's own commitment but the weight the farmers carry with his bureaucrats. The Japanese, for their part, realise that their best offer may never be good enough for Congress, so without TPA there is unlikely to be TPP.</p>
<p>Mr Froman, the trade tsar, puts TPP into a dauntingly ambitious context. He calls it central to America's pivot to Asia, a chance to show the country's commitment to creating institutions that moderate territorial disputes, and an opportunity to show emerging economies (meaning China) what economic rules the global economy should follow. "</p>
<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"></div><p></p></div></div></p>
<p>At a time when there is uncertainty about the direction of the global trading system, TPP can play a central role in setting rules of the road for a critical region in flux," he says. The flipside of this is that failure becomes an even bigger risk, which Mr Froman acknowledges. Perhaps in an effort to prod a somnolent, introspective Congress into action, he makes the dramatic claim that failure could mean America "would forfeit its seat at the centre of the global economy".</p>
<p><span style="line-height: 1.5em;">Many pundits in Washington agree that American leadership in Asia is on the table. Michael Green of the Centre for Strategic and International Studies says TPP failure would "undermine the impression of the United States as a Pacific power and look like an abdication of leadership". It would also take pressure off Japan and China to reform their economies. Mireya Solís, a Japan expert at the Brookings Institution, says it would be a "devastating blow to the United States' credibility".</span></p>
<p>Those views are echoed in East Asia. Mr Tay in Singapore says TPP failure would be a disaster: "If the domestic issues of these two countries cannot be resolved, there is no sense that the US-Japan alliance can provide any kind of steerage for the region." Deborah Elms, head of the Singapore-based Asian Trade Centre, suggests that so far the American pivot has manifested itself mainly as an extra 1,000 marines stationed in Australia. "Without TPP, all the pivot amounts to is a few extra boots on the ground in Darwin," she says.</p>
<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"></div><p></p></div></div></p>
<p>Even members of America's armed forces are worried. As one senior serving officer in the Pacific puts it, "the TPP unites countries that are committed to a trade-based future, transparency and the rule of law. It is the model that the United States and Europe have advanced versus that advanced by China. It is an opportunity to move the arc of Chinese development, or identify it as a non-participant."</p>
<p>Yet when Mr Obama mentions TPP, he talks mostly about protecting American jobs rather than safeguarding America's place in the world. The president has never fully put his back into forcing a congressional vote on TPA. There is still time for him and Mr Abe to rescue the trade talks. But unless Mr Obama leads from the front, America's own leadership in the Pacific will seem less convincing than he has repeatedly promised.</p>
<p>Click <a href="https://subscriptions.economist.com/nwcd">here</a> to subscribe to The Economist</p>
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Free-Trade: America's Big Bet

<keyword id="6355478" type="COUNTRY" weightage="80" keywordseo="Australia">Australia</keyword> and <keyword id="22501" type="COUNTRY" weightage="80" keywordseo="New-Zealand">New Zealand</keyword> have joined <keyword id="6355311" type="COUNTRY" weightage="60" keywordseo="Japan">Japan</keyword> in order to persuade India to open its rapidly growing eCommerce sector for foreign investments. These countries want to include the sector in the 16-nation regional trade pact that's being negotiated. <br />
<br />

	What’s India’s take on it? It has opposed the pact so far as there is a need to protect the homegrown online retailers. On the other hand, eCommerce companies have sought to get around the restriction on overseas capital by turning themselves into marketplaces that connect vendors with buyers. This has led to protests by brick-and-mortar retailers, who claim that they're facing stiff curbs on taking foreign money. This information was revealed in an Economic Times report. <br />
	 

	The eCommerce business is likely to reach $300-billion mark by 2030.   <br /> Meanwhile, companies such as <keyword id="6357395" type="CITY" weightage="80" keywordseo="eBay">eBay</keyword> and <keyword id="18635" type="CITY" weightage="80" keywordseo="Amazon">Amazon</keyword> have been lobbying that the Indian government should open eCommerce to foreign investment. <br /> Eyeing huge profits, other countries would also put pressure on India in this regard during June 8-13 talks in <keyword id="56919" type="COMPANY" weightage="80" keywordseo="Kyoto">Kyoto</keyword>. As per the financial daily, member countries aim to conclude the Regional Cooperation and Economic Partnership (RCEP) by the year end. <br />
	 

	"We firmly back Japan's proposal for a separate chapter on e-commerce," said an Australian government official who didn't wish to be named. "India is a growing economy and eCommerce is proving to be its strength. We are not expecting a very ambitious deal on eCommerce at the moment but let us have a chapter that could be scaled up over the years." <br /> There is a rising global interest in India's eCommerce market that <keyword id="6361649" type="CITY" weightage="80" keywordseo="Goldman-Sachs">Goldman Sachs</keyword> says will grow 15-fold from the current $20 billion to $300 billion. It cited "hyper growth in affordable smartphones, improving infrastructure, and a propensity to transact online" as key drivers. <br /> India does not allow Foreign Direct Investment (<keyword id="44528" type="ORGANIZATION" weightage="80" keywordseo="FDI">FDI</keyword>) in the business-to-consumer (B2C) segment but 100 % FDI is allowed in business-to-business (B2B) transactions, marking the difference in rules for retail and wholesale. It allows 49% FDI in multi-brand retail but with restrictions. <br /> The government is under pressure to come out with a policy on the e-commerce sector in four months as brick-and-mortar retailers have filed a case in the <keyword id="6355014" type="ORGANIZATION" weightage="80" keywordseo="Delhi-High-Court">Delhi High Court</keyword> on the issue. <br />
	 

	Further, Japan had floated a discussion paper in February to include eCommerce as a separate chapter in the RCEP negotiations. India is not in favour of this. <br /> "We have to keep the national interest in mind. We are yet to have an e-commerce policy of our own to sign a deal at the regional level," said an Indian government official. The bloc includes 10 <keyword id="5891" type="ORGANIZATION" weightage="80" keywordseo="ASEAN">Asean</keyword> countries and the six partners with which they have free trade agreements (FTAs), including Australia, China, India, Japan, Korea and New Zealand. <br />
	 

	Japan had also asked for most favored nation (MFN) status and national treatment to be accorded in the e-commerce sector. Japan has not made a distinction between B2C and B2B, the way eCommerce is regarded globally. <br />
	<br />
	(Image: Indiatimes) 
<br /><br />

Australia, New Zealand back Japan to bat for FDI in Indian eCommerce sector

<p><div class="KonaFilter image-container display-table float_right click-to-enlarge"><div><div class="image"><a title_source="HSBC" title_caption="Almost half of the world's population is in these countries." class="zoomin" href="https://static-ssl.businessinsider.com/image/55816066eab8ea2f4853bd2b-960/screen shot 2015-06-17 at 7.53.52 am.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>HSBC</span></p><p class="caption">Almost half of the world's population is in these countries.</p></div><p></p></div></div>Nearly half of the world's population lives in <span style="font-size: 15px; line-height: 1.5em;">China, India, Japan, South Korea, Australia, New Zealand, and the <a href="http://www.asean.org/asean/asean-member-states">ten member states</a> of the Association of Southeast Asian Nations (ASEAN), which have a combined GDP of </span><a href="http://data.worldbank.org/indicator/NY.GDP.MKTP.CD">$21.2 trillion</a>.</p><p><span style="font-size: 15px; line-height: 1.5em;">More importantly, these countries all</span><span style="font-size: 15px; line-height: 1.5em;"> also happen to be part of the proposed</span><span style="font-size: 15px; line-height: 1.5em;"> Regional Comprehensive Economic Partnership (RCEP), a "mega-regional" trade agreement.</span></p><p><span style="font-size: 15px; line-height: 1.5em;">And that fits into the larger trend in the global economy: regional trade reform is</span><span style="font-size: 15px; line-height: 1.5em;"> "on the move," according to HSBC's Douglas Lippoldt.</span></p><p><span style="font-size: 15px; line-height: 1.5em;"><span>Other huge (and controversial) proposed trade agreements include the </span><a href="http://www.nytimes.com/2015/06/17/us/questions-and-answers-about-the-trans-pacific-partnership.html">Trans-Pacific Partnership</a><span> (TPP), which encompasses twelve countries in the Asia Pacific (including the US), and the </span><a href="http://www.bbc.com/news/business-32691589">Transatlantic Trade and Investment Partnership</a><span> (TTIP), a free-trade agreement between the EU and the US that would be the largest planned regional trade agreement in terms of GDP.</span></span></p><p>These agreements "promise to facilitate trade and reduce protectionist measures" that still impede trade in many economies, according to Lippoldt. However, the potential adjustment costs have some analysts and politicians worried.</p><p>Still, overall, "their anticipated depth and breadth of coverage could promote structural reform across much of the world economy," according to Lippoldt.<span style="font-size: 15px; line-height: 1.5em;"> </span></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/iphone-power-user-hacks-2015-4">5 clever iPhone tricks only power users know about</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="huN2Zzczr6N8qz_gUrYzZxcxaCD8z5Sv" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Almost half of the world's population lives in 16 countries

In 2016, <keyword id="13486" type="COUNTRY" weightage="20" keywordseo="Vietnam">Vietnam</keyword> will mark the 30th anniversary of the launch of the Đổi Mới reforms, which marked the beginning of Vietnam’s efforts to reform and transform its economy. At the time, the country was still recovering from decades of conflict, was insular, and overly dependent on long-time allies such as the Soviet Union. In just one generation, Vietnam has become one of the fastest growing economies in the world, and trade has played a starring role in that transformation.<br />
<br />
In a few short years, Vietnam has become a manufacturing hub, particularly for the electronics industry and the apparel and footwear industry, with most of the products exported to markets around the world. Foreign direct investment in Vietnam continues to be robust, with billions of dollars being invested by companies from Korea, Japan, Thailand, the United States and other countries, with the majority going towards manufacturing. Vietnam’s agricultural products are also in demand around the world, and the country is one of the world’s top exporters of rice, coffee, fish and shrimp, and a range of other agricultural products.<br />
<br />
<br />
<br />
<strong>Trends in Vietnam’s GDP per capita and exports, 1986 – 2016</strong><br />
<br />
It was just about a year ago that negotiations around the landmark TPP were successfully concluded, and there was great fanfare about the benefits it is expected to bring to Vietnam. Since then, the political situation in the US has evolved in a way that makes passage unlikely this year – if ever. Likewise, Vietnam’s free trade agreement with the EU is a far-reaching pact that is expected to go into effect in 2018, but Brexit has called into question the whole concept of the EU; will other nations follow the UK’s example?<br />
<br />
Another multilateral pact, the Regional Comprehensive Economic Partnership (RCEP), encompasses ASEAN’s ten members plus six other countries including India and China, and remains under negotiation nearly five years since it was first proposed; Singapore Prime Minister Lee recently said that talks were progressing rather slowly. None of this would be happening had Vietnam’s government not made a concerted effort to open up the country and build relationships with countries around the world.<br />
<br /> In 2007, Vietnam joined the <keyword id="126959" type="ORGANIZATION" weightage="20" keywordseo="World-Trade-Organization">World Trade Organization</keyword>, marking the start of its integration into the global economy. Since then, the country has negotiated and/or entered into 16 free trade agreements, on both a bi- and multilateral basis. Recent agreements include those with Korea, the Russian Federation, the <keyword id="3145781" type="ORGANIZATION" weightage="20" keywordseo="ASEAN-Economic-Community">ASEAN Economic Community</keyword> (AEC), the EU, and of course the Trans-Pacific Partnership (TPP).<br />
<br />
<strong>What does all of this mean to Vietnam? </strong>Clearly the possible failure of TPP would be disappointing. Meanwhile the effects of Brexit remain to be seen. Regardless of what happens, there is no chance that Vietnam’s growth will be stopped – trade has become the cornerstone for its economy, and I would expect the government to enter into bilateral agreements with those TPP members with which it does not currently have agreements, and will negotiate a separate agreement with the UK at the appropriate time. But all of these developments point to the extreme difficulty of negotiating, let alone eventually ratifying multinational agreements, and the future of large economic communities could be called into question.<br />
<br />
The progress made by ASEAN nations over the past two decades has been nothing short of breathtaking, and trade has been and will continue to be a critical part of the region’s ongoing development. Trade encompasses so much more than simply producing and selling goods – it is a catalyst for progress, for greater exposure to and integration with the world, and ultimately for improving peoples’ lives. It is a multi-faceted topic, and that is why I am excited to be a part of the panel discussion at this year’s Insights ASEAN Summit.<br />
<br /> (The article is authored by By <keyword id="3791307" type="UNKNOWN" weightage="20" keywordseo="don-lam">Don Lam</keyword>, CEO and Founding Partner for VinaCapital, who is also a Member of <keyword id="852310" type="ORGANIZATION" weightage="20" keywordseo="YPO">YPO</keyword> since 2010)<br />
<br />
(YPO is a global community of chief executives dedicated to becoming Better Leaders through Lifelong Learning and Idea ExchangeTM. The YPO platform provides more than 24,000 members in more than 130 countries. For more information, visit www.ypo.org.)

You Searched For "india china rcep" and got 4 results

Free-Trade: America's Big Bet

The Economist

Australia, New Zealand back Japan to bat for FDI in Indian eCommerce sector

BI India Bureau

Almost half of the world's population lives in 16 countries

Elena Holodny

The future of trade and growth in Southeast Asia

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