Amid rising global trade war concerns, a group of selected Asian countries is working out a plan to constitute a trading bloc that promotes free trade.
Amid rising global trade war concerns, a group of selected Asian countries is working out a plan to constitute a trading block that promotes free trade. The trade ministers of different Asian nations took another step toward creating the world’s largest trading bloc on Sunday amid hopes to seal the deal by year end, Bloomberg reported. It was in Tokyo on Sunday that ministers of the 16-nation Regional Comprehensive Economic Partnership, which includes China, Japan and India, met to discuss the same plan.
“The path towards a year-end agreement is now clearer,” Bloomberg reported citing Hiroshige Seko, Japan’s trade minister. “As protectionism concerns increase globally, it’s important that the Asian region flies the flag of free trade.”
Bloomberg report also said that the new trade bloc will also include 10 members of the Association of Southeast Asian Nations as well as South Korea, Australia and New Zealand. It is expected to cover one third of the world’s economy and nearly half its population.
Even though it’s a big move, there are a few obstacles on the way including India’s requirement that any agreement to reduce tariffs on goods and services should allow for free movement of people. “There are great challenges to the global trading system at this point in time,” Bloomberg reported citing Chan Chun Sing, Singapore’s trade minister. “It serves as added impetus for us to try and achieve a substantive conclusion to the RCEP process.”
China, India and the EU have recently come under pressure from Trump on trade. The US is due to impose tariffs on $34 billion of Chinese imports from July 6, and Trump has threatened to impose levies on another $200 billion of Chinese goods. If that threat is realised, it could cut as much as half a percentage point off China’s economic growth, and also hit the American economy, economists have said.