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"Stumbling Blocks to RCEP", a Commentary by Sanchita Basu Das

2016/82 13 December 2016

The 16 participating countries of the Regional Comprehensive Economic Partnership (RCEP) concluded the 16th round of negotiations in Indonesia from 2nd to 10th December. In spite of the reports of the snail-paced progress, the chapters on economic and technical cooperation as well as small and medium enterprises were successfully negotiated. However, discussions over trade in goods, services, investment, intellectual property rights (IPR), competition policy and movement of labour remain deadlocked.

Nevertheless, some progress was made in the trade in goods chapter, which will adopt a single-tier system of tariff reduction. While the coverage of the products is not yet finalised, the murmurings coming out of the meeting suggest a range between 80% and 92% of all goods.  ASEAN is pushing for the upper range, but this proposal faces stiff resistance from countries with huge trade deficits with China.

Separately, India is pitching for concurrent negotiations of the trade in goods and services chapters, which will further complicate the discussions given the complexities of the services sector and its regulatory hurdles. India is also requesting for special dispensation to delay the implementation of duty relaxation for certain products, such as steel and textile.
 
Meanwhile, the investor-state dispute settlement (ISDS) chapter continues to be a major talking point. This mechanism, which allows legal actions by the private sector against the state, remains controversial. According to one account, there are 50 such lawsuits involving a sum of US$31 billion pending before the international arbitration tribunals involving RCEP participants. Given the high stakes involved, India, Indonesia and Australia are reconsidering their positions on investors’ rights within the ISDS framework.

Similarly, the IPR chapter is also facing headwinds, especially among the less developed countries that are highly dependent on accessibility to affordable medicine and producers of generic medicine. One controversy revolves around the notion of data exclusivity, which implies that no other company may use the patent holder’s pre-clinical and clinical trials data in their regulatory filings to produce generic medicine. A strict interpretation of data exclusivity rights will delay regulatory approval for medicine going off patent.

All in all, RCEP seems to be getting its second wind of late after missing numerous deadlines, in part due to the uncertain future of the Trans-Pacific Partnership (TPP). The negotiating parties are optimistic that the negotiations will likely conclude by end of 2017, but this elusive goal will partly depend on its success in reconciling the divergent interests among the 16 parties on the service, ISDS and IPR chapters, to name a few. The next round of negotiation scheduled for February in Japan will provide clarity on these issues.

Ms Sanchita Basu Das is Lead Research (Economics Affairs) at the ASEAN Studies Centre, ISEAS-Yusof Ishak Institute.

The facts and views expressed are solely that of the author/authors and do not necessarily reflect that of ISEAS – Yusof Ishak Institute.  No part of this publication may be reproduced in any form without permission.