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Balakrishnan hopes India will continue with ‘game changing’ Asean deal

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Foreign Minister Vivian Balakrishnan has pressed India to keep the faith with "the mother of all trade agreements" which is approaching the final stretch of negotiations between Asean and its six trading partners.

The Regional Comprehensive Economic Partnership (RCEP) will group the 10 Asean nations with China, Japan, South Korea, India, Australia and New Zealand to create a free trade pact covering a third of the world's economy. India, however, has misgivings over pressing ahead.

Meeting over the weekend in Bangkok to resolve the bottlenecks hobbling the deal, already six years in the making, Asean trade ministers said they hoped to seal it next year.

GAME CHANGING DEAL

Dr Balakrishnan called the deal a "game changer" that had the potential to secure prosperity for its members in the face of a push back against trade and globalisation.

"For India, China and South-east Asia, the key political question is, can we arrive at a formula that would expand a rising middle class and give their children a sense of optimism," he said yesterday, while trading views with his Indian counterpart Subrahmanyam Jaishankar at the India-Singapore Business & Innovation Summit.

Asked by Ambassador-at-large Tommy Koh, the panel moderator, to clarify if India would cross the finish line, Mr Jaishankar outlined New Delhi's reservations about RCEP.

India fears that the deal, which would call for a lowering of tariffs, would lead to a flood of goods from China while not assuring India of an equal access to the Chinese market, amplifying its US$57.86 billion (S$79.8 billion) trade deficit with the country.

Another worry, he said, was the weak regulatory protection for India's forte, its trade in services.

While Mr Jaishankar agreed the deal ticked the geo-strategic objectives of holding the line on protectionist and unilateral policies, he said it had to make economic sense.

"You can't sign a trade agreement for its foreign policy benefits. It has to be sold for its trade benefits. If that was more self evident to India, it would get clearly a much stronger resonance."

Singapore, the largest foreign investor in both India and China, hoped the two Asian giants would eventually tide over their differences, Dr Balakrishnan said.

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