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CABA: SEA businesses hope TPP, RCEP can co-exist

01 Oct CABA: SEA businesses hope TPP, RCEP can co-exist

CNBC interviewed SIIA fellow Pushpanathan Sundram on the sidelines of the 8th ASEAN and Asia Forum (AAF), organised by the SIIA on 1 Oct 2015. Mr. Sundram is Executive Chairman of the China-ASEAN Business Association and a former Deputy Secretary-General of ASEAN. The video is available on cnbc.com


Mr. Pushpanathan Sundram:
 ASEAN looks at TPP as (a) building block. ASEAN is working with other partners in the region, including China, to build the Regional Comprehensive Economic Partnership, and we, at least the businesses, are looking towards both trade pacts co-existing with one another. Of course, the TPP is a much-advanced agreement, the RCEP is just as ambitious an agreement, but I think both can coexist in this part of the world.

Q. Okay, coexist – can you give us a tally or score, for ASEAN, the ten nation block – who has signed up for both TPP and China’s plan, which is known as RCEP?

Mr. Sundram: 
For the RCEP, all ten ASEAN countries have signed up, as well as China, Japan, Korea, Australia, New Zealand and India, so they form the 16 countries. Of course for TPP it’s not all the ASEAN countries, we have Singapore, Brunei, Malaysia and so on. So I think in a sense, eventually as the TPP rolls out, more countries will consider joining it, because ASEAN is also going forward on trade liberalisation, the trade plus-plus in services liberalisation and so on, so I think the opportunities are there.

Q. Within ASEAN, this whole idea of an ASEAN Economic Community, is theoretically – we understand the positive benefits, etcetra, but in reality, how close are we to being able to achieve that? If nothing else, on the labour front, if we have open borders, that is not going to…that is not going to be achievable within that timeframe, wouldn’t you agree?

Mr. Sundram: Now, ASEAN is I think very pragmatic, they’re looking at focusing on trade integration first, that means trade in goods as well as investment, for trade in labour they are just focusing on skilled labour for the time being. But I don’t know. In the future it could evolve into something more, but for now it is skilled labour. In terms of implementing the economic community, which I expect to be launched in November this year at the ASEAN  leaders’ meeting, the figure is 95%, but I think I’d discount it a little bit as on the ground implementation would be much lesser as there is no way to track the implementation of it. So going forward, this figure, I think we shouldn’t take it as a given figure. I think ASEAN will continue to have to work on the economic community. so 2015 is just the start of the building of the economic community. They have a long way ahead, actually, to go.

Q. And would it be fair to say that the way ahead for the ASEAN ten is going to be – whoever can more forward first can go, the rest can say, it’s okay, you can move forward first, we’ll catch up when we can.

Mr. Sundram: Yes, that was the philosophy before. But I think they have changed that with the economic community, everyone has to meet those timelines. Previously, if you recall, the less developed countries would have five more years to implement many of the measures, but after 2015, everybody moves on the same timeline, speed. This means that ASEAN will have to help some of those less developed countries in meeting the timelines on time. It’s easier said than done. But it’s all in the mindset, so we have to work together, I guess, to move this forward.

Q. Thinking positive is one thing, having your more developed and richer neighbours help you is another, which is good. But is it realistic to expect some of the less developed and poor economies to move at the same pace as the more developed ones?

Mr. Sundram: I suspect the aim is to push these countries to move forward, but I am very sure they will not be able to move at the same speed – but they will move a faster speed. I think in ASEAN because there’s always this give and take. But if you don’t set a benchmark like what they did for 2015, I don’t think they would have achieved ASEAN 2015. So I think setting a target for themselves is going to be important, otherwise we will not see much progress. I think ASEAN ministers and the leaders will recognise that, you know, we have China, we have India growing, and if ASEAN does not do anything as a group, as one single entity, then they’re going to lose out in the game. And that’s an important aspect, the fear of losing out is always there. External pressure is actually driving them forward.

Q. How much talk is there at the conference and how much momentum is there for collective response to what’s going on in the South China Sea, China’s claims – everything we’ve been talking about, right, further development, opening up of markets to foreign competition can best or better happen in a secure geopolitical environment, but with China is pushing its claims, it’s not just the region which is nervous but the US as well – are people talking about this at the conference?

Mr. Sundram: Yes, I think this is still at the back of the mind of many of the participants. But I think you are right, we need a secure environment to move forward in terms of the ASEAN-China economic partnership. As you know, China is the biggest economic trading partner of ASEAN, and ASEAN is the third largest trading partner of China, so total we are doing some US$480 bn in trade. I think the Chinese government understands this and they would also want to look at a possible solution to the problem. Of course, on the table there is the code of conduct that both sides are negotiating. That to me is most important instrument that will bring about a secure region, so if there is a dispute in the waters there is a way, a process, to bring the tensions down. So I think this is a very important agreement that both governments should move forward and secure.