Asia-Pacific closes in on world’s biggest trade deal

Asia-Pacific closes in on world’s biggest trade deal
Vietnam's Prime Minister Nguyen Xuan Phuc speaks at the ASEAN Business and Investment summit as part of the 37th ASEAN Summit in Hanoi, Vietnam November 13, 2020. (REUTERS)
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Updated 14 November 2020

Asia-Pacific closes in on world’s biggest trade deal

Asia-Pacific closes in on world’s biggest trade deal
  • Momentum behind RCEP grew when Trump withdrew the US from the TPP in 2017, taking away its main architect and two-thirds of the bloc’s combined $27 trillion GDP

HANOI: Fifteen Asia-Pacific economies are set to conclude talks on Sunday and sign what could become the world’s largest free trade agreement, covering nearly a third of the global population and about 30 percent of its global gross domestic product.

The Regional Comprehensive Economic Partnership (RCEP), which could be approved at the end of a four-day ASEAN summit in Hanoi, will progressively lower tariffs and aims to counter protectionism, boost investment and allow freer movement of goods within the region.
A US-China trade war and US President Donald Trump’s “America First” retreat from predecessor Barack Obama’s “pivot” toward Asia has given impetus to complete RCEP, which is widely seen as Beijing’s chance to set the regional trade agenda in Washington’s absence.
The US election win by Democrat Joe Biden, however, could challenge that, with the former vice president signalling a return to stronger US multilateralism.
RCEP includes China, Japan, South Korea, Australia, New Zealand and the 10 members of the Association of South East Asian Nations (ASEAN) — Brunei, Vietnam, Laos, Cambodia, Thailand, Myanmar, Malaysia, Singapore, Indonesia and the Philippines.
India was involved in earlier discussions but opted out last year.
One of the deal’s biggest draws is that its members already have various bilateral or multilateral agreements in place, so RCEP builds on those foundations.
The idea of RCEP was hatched in 2012 and was seen as a way for China, the region’s biggest importer and exporter, to counter growing US influence in the Asia-Pacific under Obama.

BACKGROUND

Plans for the Regional Comprehensive Economic Partnership date back to 2012 as a way for China, the region’s biggest importer and exporter, to counter growing US influence in the Asia-Pacific under the Obama administration.

Negotiations for a US-led “mega-regional accord” then known as the Trans-Pacific Partnership (TPP) — Obama’s signature trade deal — were making strong progress and China was not among its 12 members.
Momentum behind RCEP grew when Trump withdrew the US from the TPP in 2017, taking away its main architect and two-thirds of the bloc’s combined $27 trillion GDP.
It was renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and it includes seven RCEP members.
As the key source of imports and main export destination for most RCEP members, China stands to benefit and is well positioned to shape the trade rules and expand its influence in the Asia-Pacific, which Obama had openly sought to prevent.
Biden is signalling a swing back to the multilateral approach of the Obama administration, but it might be premature to talk about trade deals given the huge challenges awaiting him on the domestic front, and risk of upsetting unions that helped get him elected.


Indonesia campaign helps SMEs enter Saudi market

Indonesia campaign helps SMEs enter Saudi market
Updated 19 January 2021

Indonesia campaign helps SMEs enter Saudi market

Indonesia campaign helps SMEs enter Saudi market
  • They will be the main target of the export initiative, which is estimated by the Indonesian Ministry of Trade to be able to generate $60 million

JAKARTA: Indonesia has launched a campaign to help small firms in the country compete for millions of dollars-worth of food trade in Saudi Arabia.

The government aims to help small and medium-sized enterprises (SMEs) improve the quality and competitiveness of their products to meet the Kingdom’s required standards, Indonesian trade and commerce officials have said.

Under normal circumstances, before the coronavirus disease (COVID-19) pandemic, around 1.5 million Indonesians a year make the pilgrimage to Saudi Arabia to perform Hajj and Umrah and hundreds of thousands work in the Kingdom.

They will be the main target of the export initiative, which is estimated by the Indonesian Ministry of Trade to be able to generate $60 million.

To meet the Saudi food regulator’s standards, the Indonesian Chamber of Commerce (Kadin), the Ministry of Trade, and the Ministry of Cooperatives and Small-Medium Enterprises have teamed up to assist SMEs in improving products such as bottled chili sauce, soya sauce, coffee, tea, and sugar that are in highest demand among Indonesians in Saudi Arabia.

Kadin chairman, Rosan Roeslani, told Arab News: “We have facilitated five small-medium enterprises that produce soya sauce to obtain Saudi Food and Drug Authority approval for distribution, while nine tea and coffee producers are in the pipeline to also obtain a license. We have also submitted the application for four bottled chili sauce producers.”

While travel and pilgrimage restrictions remain in place due to the COVID-19 outbreak, he said that the time before things get back to normal will be used to prepare the SMEs — which contribute 60 percent to the country’s gross domestic product and employ up to 90 percent of its workforce — for expansion into the Saudi market as soon as the pilgrimage sector resumes.

“We still have time to groom them as there are many aspects such as hygiene, and consistency in their product quality and quantity that they need to improve,” Roeslani added.

In 2014, the Ministry of Religious Affairs issued a regulation obliging catering companies that provided food and drink to Indonesian pilgrims in Saudi Arabia to source their products from Indonesian producers whenever possible.

Indonesia’s vice religious affairs minister, Zainut Tauhid Sa’adi, said that as each Indonesian pilgrim received food from caterers an average 75 times during his or her pilgrimage, demand was high but supply in Saudi Arabia remained limited and similar products from India and Thailand had been used instead.

Kasan Muhri, director general for export development at the Ministry of Trade, told Arab News that the program to prepare the SMEs had been in the making since 2017 and officials eventually decided to launch it this year despite the COVID-19 restrictions.

“Just because there are few Umrah pilgrims now and this year’s Hajj remains uncertain, it does not mean that the market is gone.

“People from around the world would still go to Saudi Arabia to perform the pilgrimage, not just Indonesians, so we are doing this to anticipate the market when the economy revives, and things are recovered. We don’t want to be left behind,” Muhri said.

Besides food and beverage products, officials say they are also looking into the possibility of exporting items such as goodie bags, prayer beads, and other pilgrimage accessories made by Indonesian SMEs.