Prime Minister of Malaysia Mohamed Mahathir announced late last week that he will conclude the expansive Asia-Pacific Trade Agreement without including India in it for the present. He was referring to the Regional Comprehensive Economic Partnership (RCEP) that includes 16 nations located in Asia Pacific. The negotiations for such an agreement started way back in 2013 but the reluctance of India to open its markets was a contentious point. Due to the slow progress of discussions, China became impatient and proposed that nations like Australia, New Zealand and India can be kept out of the deal.
The actual 16 countries that are part of this agreement include 10 Southeast Asian countries and their trading partners namely Japan, India, China, South Korea, New Zealand and Australia. If these nations could become part of one agreement they can easily form a major trading bloc which would cover about one third of world’s GDP. In a recent interview Mahathir stated that it is difficult to get all 16 economies to collate and agree on common terms as all are competing with each other and it would require radical change in their mindset to make this work.
Speaking at an Association of Southeast Asian Nations he stated that we have to stop the trade war between member nations and all RCEP participants have to consider about two propositions. They have to agree to collaboration and trade between nations in the area and they can either accept the 13 nation agreement offered by China or prefer to stick to original one that has 16 members though he would prefer the former and is acceptable to allowing New Zealand, India and Australia join them later. Malaysia has been a major beneficiary of the trade war between US and China as manufacturers moved their products here to circumvent US tariffs. Economic advisors said that Malaysia’s growth could expand further due to this trade diversion.