Wary of China’s embrace, India holds out in trade talks at ASEAN summit in Bangkok : International de

Photo: Narendra Modi’s India has hesitated over the deal partly due to protectionist influences.

The Federal Government is hopeful that what could be the world’s largest trade deal will be signed early in the new year, even though last-minute demands have stalled negotiations ahead of this weekend’s ASEAN summit.

Negotiations to try to lock down the details of the Regional Comprehensive Economic Partnership (RCEP) had been happening on the sidelines of ASEAN and the East Asia summits.

There was a sense of optimism that the current ASEAN meeting in Thailand’s capital Bangkok would be the scene of a deal, but niggling concerns and last-minute demands from countries including India mean it is now almost certain leaders will not have an agreement to announce before the end of the summit.

“Trade agreements are always challenging in terms of the different interests of different parties,” Trade Minister Simon Birmingham told reporters in Bangkok.

“Australia goes into this trying to achieve the most ambitious agreement possible, but realistic that we have, across the 16 countries, huge development differences, huge population differences, huge differences in the system of government and cultures of those countries.

Simon Birmingham looks to the right of the camera as he stands in front of a lush garden. He wears a suit and is mid-speech. Photo: Trade Minister Simon Birmingham said “trade agreements are always challenging”.

“Bridging those divides is probably the biggest challenge that’s ever been faced in terms of a trade agreement being signed and sealed around the world.”

Against a backdrop of global trade tensions, and particularly the tit-for-tat trade war between US President Donald Trump and Chinese President Xi Jinping, Prime Minister Scott Morrison’s first meeting once he arrives in Thailand late on Sunday will be with Chinese Premier Li Keqiang.

It could be an interesting chat between the pair, given Beijing’s warning to Canberra a few days ago to effectively mind its own business after Foreign Minister Marise Payne promised Australia would not hold back in pushing China to improve its human rights record.

Australia has been in the diplomatic freezer for a number of months, but the Prime Minister did secure a fleeting photo opportunity with the Chinese Vice President at the inauguration of Indonesia’s President Joko Widodo last month.

The image shows a map of the 16 Asia Pacific countries involved, and includes information of what the deal covers

Deal would cover almost half the world’s population

The scale of the trade pact is huge, covering 16 countries, more than 30 per cent of global economic activity, and almost half the world’s population.

India’s hesitation and anxiety over the deal has been fuelled by protectionist influences on the subcontinent, with Prime Minister Narendra Modi under pressure to avoid a deal which would undermine local manufacturing.

“The Indian economy is slowing, and it’s not doing too well,” said Dr Shiro Armstrong, Director of the East Asian Bureau of Economic Research at the Australian National University.

“Traditionally, India hasn’t been an open economy that’s embraced value chains, hasn’t embraced trade and investment.

“India has been a country that has lagged behind in commitments, it looked like for a while that they were going to get over the line, but recently with some demonstrations and protests in India, it looks a bit harder.”

Mr Modi’s presence in Bangkok for the ASEAN and East Asia summits could be viewed as promising for those trying to coax his Government over the line, easing concerns any deal including China will harm its economy.

“India needs to bite the bullet, and realise it’s a gradual transition, and it can actually benefit a lot from engaging China in this framework,” Dr Armstrong said.

“It’s not the first time that we’ve come close to a deal — at the end of last year, as well, there was talk of reaching a framework deal we could move forward from.

“But right now, it’s even more urgent than before because of the uncertainty in the economy, because of the US-China trade war, because of the troubles that countries are having with protectionism and nationalism.”