Logo of Phnom Penh Post newspaper Phnom Penh Post - Alternative to TPP shows no sign of activity: analysts

Alternative to TPP shows no sign of activity: analysts

Content image - Phnom Penh Post
A view of a container storage yard at a port terminal in Kandal province. Heng Chivoan

Alternative to TPP shows no sign of activity: analysts

While Prime Minister Hun Sen has publicly expressed his distaste for the Trans-Pacific Partnership (TPP), which was dealt a critical blow by US President Donald Trump’s decision to withdraw the United States from the agreement, economists say there has been little visible progress in cementing a rival multilateral free trade agreement that puts China and ASEAN in leading roles.

While Cambodia was never included in the TPP’s 12 signatory Pacific Rim nations, it is included in the Regional Comprehensive Economic Partnership (RCEP), a more inclusive and less-stringent 16-nation Asia-Pacific free trade agreement that counts all 10 ASEAN countries as members, as well as China, India, Australia, Japan, South Korea and New Zealand.

Speaking during the opening session of the Fifth China Round Table on WTO Accession in Siem Reap on Monday – a three-day conference aimed at discussing best practices for least-developed countries to join the WTO – the premier reiterated his opposition to the floundering TPP.

“I say honestly, I want the TPP to die because it would split ASEAN by not including all members,” he said. “The TPP would only take four ASEAN members while leaving out the other six. Why not take all so that it doesn’t split ASEAN?”

Despite the apparent demise of the TPP, there is little to indicate that the alternative RCEP, first introduced in 2011, was any closer to realisation.

“From my vantage point there hasn’t been much material progress on the RCEP,” said Miguel Chanco, lead analyst for ASEAN at the Economist Intelligence Unit. “Naturally there has been more discussion about the deal since the death of the TPP, but that is about the full extent of it – more talk, less action.”

He said from a purely economic standpoint it would make sense for Cambodia to push for the China-led regional trade agreement.

“As Cambodia will continue to move up the income ladder it will gradually lose trade preferences with a host of key markets in the West,” he explained. “Pushing for RCEP would help the country diversify away from its heavy reliance on exports to the EU and the US by securing greater access to non-traditional markets in the immediate region.”

Jayant Menon, lead economist for Asian Development Bank’s Office for Regional Economic Integration, was more optimistic that RCEP members were closing in on a final draft, noting however that numerous deadlines to settle negotiations had been missed.

“But this may also indicate a desire to achieve concrete reforms, rather than just compromise,” he said. “There are good signs that the agreement may be concluded this year.”

Menon added that if the RCEP were concluded, Cambodia would stand to gain with preferential access to a combined market of 3.4 billion people and 30 percent of the world’s GDP. The agreement could also help spur flows of foreign direct investment (FDI) into the Kingdom.

However, Arup Raha, chief economist of Malaysia-based CIMB Group, argued that it could take some time before any of the signatories actually saw benefits. “I actually haven’t seen any movement in regards to RCEP,” he said. “And even if there was, there is still the bottleneck of India being willing to reduce its tariffs and liberalise trade.”

Raha advocated that in the meantime Cambodia should try to broker bilateral trade deals that allow the Kingdom to plug into supply chains by catering to the demand of end consumers in more prosperous nations.

“What Cambodia needs to do is diversify its exports to attract FDI. The country is still coming from a low base reliant on garments,” he said. “And with the maturation of supply chains and the slowdown of global trade due to China’s economic rebalancing, Cambodia needs to be careful on how it positions itself for the future.”

MOST VIEWED

  • ‘Life goes on’ if Cambodia loses Everything But Arms

    Cambodia's business sector is exploring ways to mitigate any fallout from a possible loss of access to the EU’s Everything But Arms (EBA) agreement as talks continue before the 28-member bloc makes a final decision. The EU monitoring process is set to conclude in

  • Nesat beach: A magnet drawing tourists to the Kingdom’s coastline

    A white sandy beach lined by countless coconut trees awaits travellers off Cambodia’s southwest coast in Koh Kong province’s Srae Ambel district, about 170km from Phnom Penh. Over the past few years Nesat beach – a name inspired by a nearby fishing village – has

  • PM: Workers must train for Industry 4.0

    Prime Minister Hun Sen has urged the Kingdom’s workforce to seek more technical training and strengthen their skills if they are to avoid job losses resulting from the Fourth Industrial Revolution. Hun Sen said the fourth industrial revolution is like a double-edged sword that

  • Huawei applies for OS trademark in Cambodia

    China's Huawei Technologies Co has applied to trademark the “Hongmeng” operating system (OS) in a number of countries including Cambodia in a bid to launch its homegrown operating system as a replacement for the Android OS, Reuters has reported. Huawei has applied to trademark the “