China moots ASEAN+3 FTA without India, Australia and NZ

27 May 2019


China has proposed an ASEAN+3 mega free trade agreement that excludes India, Australia and New Zealand, in a move that could bring together 16 countries, including the ASEAN member countries, China, Japan and South Korea in a new trade bloc.

China hopes to push through the current proposal in the light of US pressure on most Asian countries to open up markets, although an earlier proposal made by Beijing for a similar free trade pact was rejected by Japan.
Officials in India’s commerce ministry feel that China has revived the proposal to put pressure on India to give it concessions similar to those by other countries at the RCEP negotiations.
China is reported to have started pushing for the ASEAN+3 free trade pact at the East Asia Summit that brings together 18 countries that are negotiating the Regional Comprehensive Economic Partnership (RCEP).
The ministry of external affairs is reported to have sought comments from the commerce ministry on China’s proposal for an ASEAN+3 FTA. The next East Asia Summit, which is a forum of 18 countries of the Asia-Pacific region formed to fulfil the objectives of regional peace, security and prosperity, is in Turkey next month.
Since RCEP members, including the ASEAN, are proposing zero tariffs on over 90 per cent traded items, New Delhi is apprehensive of Chinese goods swamping its market, destabiling domestic producers. 
If finalised, the RCEP will result in the largest free trade bloc in the world accounting for 25 per cent of global GDP and 30 per cent of world trade.
China is trying to impress other countries of the region with its free trade offer knowing well that none of the other countries pose any trade threat to China. On the other hand, China could dump its cheap products across the Asia Pacific.
China is also looking at support from Australia and New Zealand, thus putting more pressure on India to be more flexible in the RCEP negotiations.
The trade war with the US is forcing China to look for alternative markets and hence the push for an ASEAN + 3 arrangement to create a new order in the region with itself at the helm.
While, Japan earlier insisted on India’s participation in the negotiations for a regional bloc as it believed that the country could act as a balancing factor and block China’s efforts to increase its influence over the region, this time, with US pressure on both China and Japan, it is not known if China has reached some kind of understanding with Japan on the matter.
At present, officials from RCEP countries are holding an inter-sessional meeting in Bangkok, which is to be followed by another round at the end of next month.
Most RCEP countries want to conclude the negotiations for the free trade bloc by the year-end, but India so far has refused to be hurried into giving its commitments.

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