India will not join RCEP trade deal in blow to sprawling Asian pact

India's Prime Minister Narendra Modi shakes hands with China's Premier Li Keqiang. (AFP)
Updated 04 November 2019

India will not join RCEP trade deal in blow to sprawling Asian pact

  • India dug in over concerns about market access, fearing its domestic industries would be hit hard if the country was flooded by cheap Made-in-China goods

BANGKOK: India said Monday it would not join a sprawling Asian trade pact, dealing a blow to the China-backed deal at the end of a Bangkok summit held against a backdrop of global growth fears.
The Regional Comprehensive Economic Partnership (RCEP) was meant to account for 30 percent of global GDP and loop in half of the world’s people.
But India dug in over concerns about market access, fearing its domestic industries would be hit hard if the country was flooded by cheap Made-in-China goods.
“We have conveyed to the participating countries that we will not be joining the RCEP,” Vijay Thakur Singh, a senior diplomat in charge of East Asia for India’s foreign ministry, told reporters.
“Our decision was guided by the impact this agreement will have on the ordinary human beings of India and livelihood of people, including the poorest of the poor,” she said.
The 11th-hour pullout comes after days of late-running negotiations at the Association of Southeast Asian Nations (ASEAN) summit, which closed Monday.
The meeting was dominated by trade issues — with RCEP front and center — backlit by the crippling US-China tariff war.
India’s decision is seen as a blow to the deal, which now includes all 10 ASEAN states plus China, Japan, South Korea, Australia and New Zealand — notably excluding the United States.
The remaining members are aiming to sign it next year after reviewing an agreed draft text.
The news came after a full day of meetings at the summit, attended by the leaders of Japan, South Korea, and India, along with China’s premier.
Some leaders pushed back against protectionism amid fears Trump’s trade war with China could slow global growth to the lowest rate in a decade, according to an International Monetary Fund prediction.
“We need to protect the free-trade order... and bring the global economy back on track,” said South Korean leader Moon Jae-in.
The US-China spat has seen the two sides swap tariffs on billions of dollars worth of goods, though they have agreed to roll back some of the measures with a “first phase” deal that could be soon signed.
Notably absent from the Bangkok talks were any top US officials — Washington sent Commerce Secretary Wilbur Ross and National Security Adviser Robert O’Brien in lieu of President Donald Trump.
That decision raised diplomatic eyebrows and appeared to prompt several Southeast Asian leaders to skip a meeting with US officials on Monday.
Just three leaders from the 10-member ASEAN bloc showed up to the session, along with a host of foreign ministers.
But O’Brien, Trump’s special envoy to ASEAN, shrugged off the apparent snub, describing “excellent conversations” with leaders.
“I was treated generously,” he told reporters.
O’Brien earlier read a letter from Trump inviting “the leaders of ASEAN to join me in the United States for a special summit” in the first three months of next year.
Trump attended the 2017 summit in Singapore and Vice President Mike Pence attended last year’s event in Manila.
But the Republican president could not come this year because he was busy with campaign events back home, a senior White House official said.
Trump’s administration is accused of retreating from Asia after he pulled out of the Trans-Pacific Partnership (TPP) — slated to be the world’s largest trade pact before the withdrawal.
The US leader has said he wants to pursue bilateral agreements over free trade accords to narrow trade gaps in the region — part of his “America First” clarion call.
Thailand handed over the ASEAN chair to Vietnam, where the RCEP deal could finally be signed, after years of gruelling negotiations.
A senior trade diplomat with knowledge of the negotiations said Indian Prime Minister Narendra Modi did not budge because he was under domestic pressure.
But the source held out the option that New Delhi could join at a “later date” even after it is signed — if outstanding issues are resolved.
China’s deputy foreign minister Le Yucheng echoed the view.
“Whenever India is ready, it is welcome to get on board,” he said before Delhi confirmed its pullout.
Analyst Deborah Elms said the deal shows a commitment to “stabilising trade in the region at a time of growing uncertainty.”
But “India will never get a better deal from the members than what they have already managed,” said Elms, director of the Asian Trade Center.

Innovation jobs flocking to a handful of US cities

Updated 09 December 2019

Innovation jobs flocking to a handful of US cities

  • Economists fear job clustering could have a “destructive” influence on society

WASHINGTON: A new analysis of where “innovation” jobs are being created in the US paints a stark portrait of a divided economy where the industries seen as key to future growth cluster in a narrowing set of places.

Divergence in job growth, incomes and future prospects between strong-performing cities and the rest of the country is an emerging focus of political debate and economic research. It is seen as a source of social stress, particularly since President Donald Trump tapped the resentment of left-behind areas in his 2016 presidential campaign.

Research from the Brookings Institution released on Monday shows the problem cuts deeper than many thought. Even cities that have performed well in terms of overall employment growth, such as Dallas, are trailing in attracting workers in 13 industries with the most productive private sector jobs.

Between 2005 and 2017, industries such as chemical manufacturing, satellite telecommunications and scientific research flocked to about 20 cities, led by well-established standouts San Francisco, Seattle, San Jose, Boston and San Diego, the study found. Combined, these mostly coastal cities captured an additional 6 percent of “innovation” jobs — some 250,000 positions.

Companies in those industries tend to benefit from being close to each other, with the better-educated employees they target also attracted to urban amenities.

Brookings Institution economist Mark Muro said he fears the trend risks becoming “self-reinforcing and destructive” as the workforce separates into a group of highly productive and high-earning metro areas and everywhere else.

Even though expensive housing, high wages, and congestion have prompted some tech companies to open offices outside of Silicon Valley, those moves have not been at scale. Most US metro areas are either losing innovation industry jobs outright or gaining no share, Muro wrote.

Over this decade, “a clear hierarchy of economic performance based on innovation capacity had become deeply entrenched,” Muro and co-author Rob Atkinson, president of the Information Technology and Innovation Foundation, wrote in the report. Across the 13 industries they studied, workers in the upper echelon of cities were about 50 percent more productive than in others.

For much of the post-World War Two period labor was more mobile, and the types of industries driving the economy did not cluster so intensely, a trend that started reversing around 1980.

Concerns that the US is separating effectively into two economies has sparked support for localized efforts to spread the benefits of economic growth.

The Federal Reserve has flagged it as a possible risk to overall growth, and some of the presidential candidates running for office in 2020 have rolled out proposals to address it. One aim of Trump’s decision to impose tariffs on imports from China and elsewhere is to revive ailing areas of the country.