Ministers Want to Complete RCEP by Year’s End: Asean Update

(Bloomberg) --

Commerce Secretary Wilbur Ross said the Trump administration remained “fully committed” to the Indo-Pacific, amid questions over U.S. strategy in the region fueled by the president’s absence from a regional summit.

Ross spoke at a business forum in Bangkok organized alongside meetings hosted by the 10-member Association of Southeast Asian Nations. Ross and National Security Adviser Robert O’Brien are leading a downgraded American delegation.

Negotiators from 16 nations are seeking a breakthrough on the world’s largest regional trade pact, the Regional Comprehensive Economic Partnership, after India jeopardized the deal with last-minute requests.

Leaders had planned to present a preliminary deal on Monday, paving the way for countries to finalize details on the legal framework of an agreement that would cover one-third of the global economy. The Philippines said Saturday that negotiations wouldn’t be completed until February.

Here’s the latest (all times local):

China, U.S. Need to Meet Each Other Halfway: Li (4:17 p.m.)

The healthy development of China-U.S. relations requires the two sides to meet each other halfway, which is what the international community expects, Premier Li Keqiang said in a statement provided by the Chinese foreign ministry.

Asean leaders snub U.S. summit (3:33 p.m.)

Most Asean leaders skipped a summit with America’s representatives after President Donald Trump avoided the annual meetings, with leaders from Thailand, Laos and Vietnam the only ones to show up. Thai foreign ministry spokeswoman Busadee Santipitaks confirmed the other leaders stayed away, and video from the event showed seven foreign ministers sitting at a table usually reserved for prime ministers.

The U.S. had expressed concern to Asean diplomats about the “intentional effort to embarrass” Trump with the partial boycott, the Bangkok Post reported, citing an unidentified diplomat. The U.S. delegation is the country’s lowest level representation at the meetings since Trump’s predecessor Barack Obama upgraded ties with Asean in 2011.

Some RCEP details still being worked out: Jurin (3:10 p.m.)

Thai Commerce Minister Jurin Laksanawisit told reporters that 16 countries had agreed to issue a joint RCEP statement on Monday, and that two nations were still working on market access negotiations. He said India had agreed to issue a joint statement, but gave no details. Jurin said RCEP ministers would try to complete the deal by year end, paving the way for it to be signed next year.

Ross, Li Meet (3:03 p.m.)

Commerce Secretary Ross met with Chinese Premier Li Monday afternoon, a person familiar with the discussion said. In an interview with Bloomberg on Sunday, Ross expressed optimism the U.S. would conclude an initial agreement with China this month before working on additional phases. He also said licenses would be coming “very shortly” for U.S. firms to sell components to Huawei Technologies Co.

China’s offshore strengthened as much as 0.27% to 7.0228 per dollar on Monday, at one point breaking through its 100-day moving average for the first time since May.

15 countries have concluded RCEP negotiations: China (12:23 p.m.)

Fifteen nations have concluded all negotiation on the text of an RCEP deal and all substantial negotiations on market access, China’s Li said, according to a statement from the country’s foreign ministry. China is also ready to speed up free trade agreement talks with Japan and South Korea, according to the statement.

U.S. must defend Asean relationship: O’Brien (11:17 a.m.)

National Security Adviser O’Brien addressed the U.S.-ASEAN summit, saying Washington must defend its relationship with Asean at all cost. America and China, which have been locked in a protracted trade battle, are battling for influence in the Asia-Pacific region. China’s behavior in the disputed South China Sea goes against the rules of respect, he said.

O’Brien read aloud a letter from Donald Trump saying Washington is committed to Asean and the Indo-Pacific and inviting regional leaders to join the president in the U.S. for a special summit.

Indo-Pacific engagement a priority: Ross (10:08 a.m.)

The commerce secretary said in a morning keynote that the U.S. will continue negotiating a free-trade accord in the region, with U.S. Indo-Pacific trade at a record $2 trillion in 2018. He called engagement with the region a priority for Trump.

Ross also addressed Trump’s protracted trade war with Chinese leader Xi Jinping, saying the U.S. was “very far along” with “Phase One” of a deal. He expressed similar optimism in an interview with Bloomberg Sunday night on the sidelines of the summit, where he also said licenses would be coming “very shortly” for U.S. firms to sell components to Huawei Technologies Co.

‘Significant’ RCEP progress: Thai official (9:48 a.m.)

Kobsak Pootrakool, a deputy secretary-general to Thai Prime Minister Prayuth Chan-Ocha, said officials had worked “very hard” up until Sunday night to make “significant progress” toward an RCEP deal. “Thailand will continue to actively work with parties concerned in order to reach an agreement subsequently,” he said.

Sunday Highlights:

‘Normal track’ for Australia-China ties (6:30 p.m.)

In an afternoon meeting with Australian Prime Minister Scott Morrison, Chinese Premier Li called for Canberra to “push China-Australia relations back to the normal track,” according to a statement from China’s foreign ministry.

“There is no historical grievance and fundamental conflict of interest between China and Australia,” Li said, according to the statement. The two sides should view each other’s development as an opportunity, gather common interests, and conduct constructive exchanges and cooperation in the principle of mutual respect and equality, he said.

Ardern gives keynote speech (5:20 p.m.)

New Zealand Prime Minister Jacinda Ardern addressed the need for a comprehensive free trade agreement in her speech to the Asean Summit. “What use is growth if everyone is not sharing in the benefits that it could bring?” she said. “This includes a shared commitment to the rules-based trading system, integration system and recognition of benefits of trade and sustainable development.”

Li wants China, Vietnam to address maritime issues (4:36 p.m.)

Chinese Premier Li Keqiang met with Vietnam’s Prime Minister Nguyen Xuan Phuc Sunday amid a standoff between the countries in the South China Sea, saying the two sides should “properly address maritime issues and create favorable conditions for expanding cooperation.”

Tensions at Vanguard Bank reef, claimed by both countries, has in recent months become a focal point of tensions.

“China is ready to consolidate political mutual trust and deepen mutually beneficial cooperation with Vietnam for the benefit of the two peoples,” according to a statement on the website of China’s State Council.

Medvedev calls for Eurasia, Asean cooperation (4:21 p.m.)

Russian Prime Minister Dmitry Medvedev said Russia and Asean should work together on cybersecurity issues and called for legislation regulating the transfer of personal data in an afternoon speech.

Don’t know what U.S. wants: Duterte spokesman (4 p.m.)

Salvador Panelo, a spokesman for Philippine leader Rodrigo Duterte, told reporters that he doesn’t know what the U.S. wants in the region and that Asean nations are asking for restraint in the disputed South China Sea, the site of a growing battle for influence between China and America. The U.S. earlier failed to stop China from building artificial islands in the waters and its current attempts are too late, he said.

Guterres fears a global divide (3:47 p.m.)

United Nations Secretary-General Antonio Guterres repeated fears that tensions between the U.S. and China would split the world in half.

“I see now the concern emerging on the horizon, the possibility of a great fracture with the world’s largest economies splitting the globe into two, each with its own dominant currency, trade and financial rules, its own internet and artificial intelligence capacities and its own zero-sum geopolitical and military strategies,” he said during the Asean meetings.

Jokowi offers to help solve Rohingya crisis (1:45 p.m.)

Indonesian President Joko Widodo tweeted that he offered Indonesia’s help solving the Rohingya Muslim crisis during a meeting with the UN’s Guterres in Bangkok Saturday. The president, anown as Jokowi, said they discussed the humanitarian crisis in Myanmar’s Rakhine State, the site of atrocities against the Rohingya, and in Palestine. Indonesia is the world’s most populous Muslim-majority country.

Modi doesn’t address RCEP (10:25 a.m.)

Indian Prime Minister Narendra Modi addressed an event in Bangkok, but didn’t mention the RCEP pact. Instead he focused on the country’s advancements in technology, infrastructure and healthcare while fighting poverty and corruption. “This is the best time to be in India,” he said.

Push for RCEP to be finished this year: Prayuth (10 a.m.)

Asean and the world have faced rising challenges and uncertainties ranging from trade disputes to international crime, and their strong partnership is important for the region, Thai Prime Minister Prayuth Chan-Ocha said while opening the 35th Asean Summit. Ministers will push for RCEP’s key contents to be finished within the year, which will help boost trade and investment and build immunity for the region, he said.

Asean shouldn’t choose between U.S. and China, Duterte says (8:05 a.m.)

Asean countries shouldn’t be forced to choose between the U.S. and China, a statement from Philippine leader Rodrigo Duterte’s office said, amid a regional battle for influence between the world’s two biggest economies.

Duterte discussed “the changing regional landscape which recognizes the rise of the dragon (China) in a world still dominated by a soaring eagle (United States),” said the statement from presidential spokesman Salvador Panelo. “He called on ASEAN leaders not to choose -- or be forced to choose -- sides by pointing out what he calls a ‘strategic mistake’ committed by the past leaderships of the Philippines, which he his now rectifying through his independent foreign policy.”

Since taking office, Duterte has pivoted toward China and away from the U.S., a longtime defense ally. Despite accepting Chinese investment, he said last month that he has nothing against the U.S., describing it as “a close friend.”

Saturday Highlights:

No RCEP pact until February: Philippines (4:10 p.m.)

Discussions for an RCEP deal won’t be completed until February because one major country isn’t ready, Philippine Trade Minister Ramon Lopez told reporters. His comments tempered expectations that an agreement would be announced within days. He said the one country -- which he didn’t identify -- wanted to “have confirmation before they can totally agree.” While Lopez didn’t identify the country, Bloomberg reported this week that India made last-minute demands after having earlier agreed to terms of a deal.

‘You go alone, you’ll be bullied’: Mahathir (2:01 p.m.)

Malaysia’s prime minister Mahathir Mohamad told a business summit that Asean can learn from U.S. President Donald Trump on trade and that a change in U.S. leadership could lead to a better direction. Southeast Asian countries should stick together in trade disputes with the U.S. and European Union to avoid being bullied, he added.

India wants greater ambition on services: Modi (11:10 a.m.)

India’s Modi said his country wants to see greater ambition on services even as it remains “committed to a comprehensive and balanced outcome” from ongoing RCEP negotiations.

“We have put forward reasonable proposals in a clear manner and are engaged in negotiations with sincerity,” he said in an interview with the Bangkok Post. “We would like to see commensurate levels of ambition on services from many of our partners, even as we are ready to address their sensitivities.”

The prime minister added that India was clear that a mutually beneficial RCEP was in its interests and those of all partners in the negotiations. India has long pushed for other countries to allow greater movement of labor and services in return for opening its market of more than 1 billion people to certain goods.

To contact the reporters on this story: Natnicha Chuwiruch in Bangkok at nchuwiruch@bloomberg.net;Dandan Li in Bangkok at dli395@bloomberg.net;Philip J. Heijmans in Bangkok at pheijmans1@bloomberg.net;Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net

To contact the editors responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net, Karen Leigh

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