At this stage, negotiators have finalized details on economic cooperation for customs and trade facilitation, state procurements, economic and technical cooperation as well as small and medium-term enterprises. The remaining articles are more difficult to resolve, including e-commerce to competition, intellectual property rights, telecommunications and market expansion for goods to services and investments.
At this stage, we believe that the sixteen-member countries are looking for some positives to curb the downsides to GDP and export growth. Some, such as India and China, are suffering from below-trend growth and a few (such as Singapore) are facing prospects of a recession. This has diverted Asian governments to growth-support measures rather than taking liberalization actions. The appetite is only set to decrease further in 2020.
The RCEP has the potential to supplement any downsides in global trade brought about by the U.S./China trade war. The ASEAN-10 countries, as well as the six major trade partners (China, Japan, South Korea, India, Australia and New Zealand) contribute 40-50% of world growth at the moment.
However, there are bilateral tensions between the members themselves. Most notably, Japan and South Korea are engaged in a trade spat. China and India also have some trade tensions, with India concerned about the impact of its agricultural sector if tariffs are cut.
2019 talks are slated to end in November at the ASEAN Summit. If progress is not made by then, the risk is for a more limited agreement or less participating partners. This will likely reduce any positive benefits from the trade pact.