 Good morning. My name is Ling Shreiling and I'm an executive producer at Channel News Asia in Singapore. I'm very pleased to be the moderator for this session, which is called the Biggest Trade Deal in the World. When we started this year, it looked pretty hazy. Lots of things were still happening. The pandemic still was roiling the world. A lot of things also on current affairs that are pressurising things. But one good thing seemed to come out of First Jan 2022. And that was the kick-off of RCEP, the biggest trade deal in the world. It came with the promise of creating more than 2 million jobs and a never before opening up of markets in North Asia between China, Japan and South Korea. But five months on has RCEP delivered. With me is an excellent panel whom I hope will answer some of the questions, but in truth actually we're also hoping will come up with some very good questions that will lead us forward. On my right here is Baba Muhammad Lutfi, who is the trade minister of Indonesia. Indonesia is the very, very largest economy of the ASEAN countries and a major leader. This is actually the minister's second round as trade minister. He's been in this role twice. And prior to that he was also ambassador to the US as well as to Japan. On my left here is Mr Takdinami. Mr Takdinami is CEO of Santori, which is the largest food and beverage company in Japan. And I think there are very, very few people in this room who have not actually tried either Yamazaki or Orangina. So on all ends of the spectrum Santori is a very, very major player. Prof Simon Evernet, he is international trade professor at St. Garland here in Switzerland. But he also does something fascinating and that is the global trade alert, which is I think one very uniquely that monitors protectionism around the world. So if that is a, or if you want to use another term, security. It depends on who's using it. There you go, we've started the conversation already. But at last but absolutely not least, Abhisheba is doing a wonderful job in providing technological services for the global trade industry. And she has a lot to say concerning will we be able to just get our goods, our clothes, whatever we're ordering more reliably and possibly even cheaper when trade deals come in. All right, let's kick off with the question I asked right in the beginning. Minister, do you think RCEP has delivered? COVID also being blamed for these things. This is 10 countries. Some are very big, 10 of ASEAN countries plus five dialogue partners, including big economies, smaller economies, big democracy, you know, at least one kingdom of absolute monarch, two communist countries, four big democracies. So in the countries, all of all in all, we're moving forward very good. We're supposed to ratified everything by the first of January, but COVID in Indonesia, I have to go back to parliament to get it ratified. In Indonesia, maybe with the Philippines will be the last, maybe by, I'm going to see the parliament on the 9th of June to have the final process of this. So we're looking second semester, the kickoff of ratifications of RCEP. This is the biggest trade deal ever. 30% of the populations, 30% of the GDP, 30% of trade and 30% of foreign direct investment. I'm really looking forward because especially of what just happened in the world, the breakdown of globalizations, of global value chain. This is especially proven by the military aggressions in the Crimea, making it even bigger and becoming important. But if you ask me whether this is already going or not, I think it's already kicked off because the ASEAN scheme with these dialogue partners, you know, we already have, you know, the ASEAN Australian New Zealand free trade agreement, ASEAN China free trade agreement, ASEAN Japan free trade agreement. So we have these things. You know, the market access basically is already there, but the trade facilitation and making it to be more comprehensive will be done probably second semester of 2022. We're ready, willing and able to come back to trade, to create prosperity in the region, peaceful and balanced and inclusive, right Professor? Okay, we'll come back to the inclusive as well. Tak, what do you think? Do you think that ASEAN is already beginning to show the benefits that you'd hoped it would? Not yet. I think it's been only five months and it's already to say good or not. And key thing is China. The success of ASEAN is dependent on the commitment of China. The reason behind is, first of all, China is under zero-copy policy. China is the center of the global supply chain, which is a huge bottleneck to the world. And ASEAN will be a huge supply chain over the world and should be led by China. So what about their commitment? And they will be a huge driving force of ASEAN. But we don't know about that because to be honest, China is not fully trusted by the members yet. So they have to demonstrate their commitment to ASEAN after zero-copy. So they have to gain the trust from the members over, let's say, for a couple of years. And then gradually, members will get to trust China because Chinese reputation is not that good. But I think this is a great opportunity for China to show they are serious about free trade. And definitely, this is a great chance for China to be able to be a part of the global chain and play a key role. And then that might be a pathway or a clue for China to be able to negotiate for joining CPTP. Well, we don't have a Chinese delegate, a Chinese person here to speak for China, but I will bounce that very quickly off before we go further. Back to the minister here and say, is that true? Do you feel that the other members in ASEAN don't trust China? Professor, such a sum, you have to be the optimistic one. I'm supposed to be the not optimistic one. The study shows there's a graph given by the Dutch Institute of Tingting. And it shows that because of China, every country in the world is coming back with the global value chain, except China. But because they have their own ways on taking care of the economy. But for countries like Indonesia, this is a golden opportunity. We look at the supply chain, we look, for example, the automotive industry in Europe. You know, from before COVID after COVID, the growth market growth by 8%. But the supply growth industry only 3%. This number shows the same thing. You know, we are producing cars. We're beating Thailand right now. So before COVID, we sell about 8.8 billion dollars. You know, it would drop by 20%. But coming back growth only 2.7%. You know what happened? They're coming back and investing in Indonesia. So I'm very optimistic of this. This is what we call new equilibrium. How come we can, you know, feel optimistic under the current COVID, zero COVID policy of China? Because every country has suffered now. And we don't know when the zero COVID will be eased toward the normalcy. And Minister, do you think, you know, after the party assembly, are you sure that China will get into the supply chain? I don't know about the assembly, Mr. CEO. You know what? They just announced the trade balance between Indonesia and China. A bit scared. You know why, Professor? Indonesia surplus 1.1 billion dollars with the Chinese. You know, I don't want this to be out in the open then because the Chinese will start looking at what we're doing wrong and start doing anti-dumping and subsidy measures and everything like that. But Indonesia right now, a country that, you know, had a trade balance of minus 15 billions for the last, I don't know, 10, 12 years. You know, last year, almost even today, first quarter, 1.1 billion actually surplus. OK, I'm now going to jump in here because this is fantastic, but we need to let the others get a word in edgeways. Professor, what do you think? Do the numbers bear this out? The protectionism? So, RCEP is a meaningful deal and the ministers already hinted at this. Before RCEP happened or came into force, this region was putting in place non-tariff barriers like there was no tomorrow. In the five years before the pandemic, nearly 4,000 non-tariff barriers were put in place by the RCEP countries. About 40% of the trade between them is covered by those barriers. So there's plenty to try and cut away at or to rationalise, OK? This, though, will take time and, you know, trade agreements are a bit like your long-term fitness trainer, right? They pay off over time. If you want to flip an answer, is RCEP working? Quite frankly, it's probably created more jobs in trade ministries than in the private sector by now, OK? But as the private sector's expectations are just, and this is exactly the comment which I think we heard earlier, then they will then start adjusting, expanding, and this will generate benefits over time. If the World Bank's got the numbers right, this will pull up real wages in the RCEP region and in particular in the sectors which hire a lot of women. So there is an inclusive dimension to this as well. So I think the region's got to stick with it and there will be payoffs. Ava, are you seeing this in global supply chains? Do you think that this, you know, some of the shifts that we're seeing we definitely had seen shifts to Thailand, we've seen shifts to Vietnam, even Malaysia and definitely Indonesia. But what do you think? Well, right now it's hard to distinguish what's the result of the COVID situation and what's the result of RCEP and other policy measures. But to underscore what Professor Evanette said, you know, coming out of such a big thing like RCEP, first we see change and only after a long time do we see improvement because the change has to trickle down and eventually a lot of supply chains will have dramatic changes in their endpoint amongst the member states and business will have to adapt. They'll have to get to know new consumers. These are different markets. So they have to change their planning. They have to change capacity management. But gradually what we will see are simplified supply chains and transport and logistics that creates value. Well, coming back to Tark, I would say if we look at Santori after all, people would say that RCEP is going to be incredible Santori, even if it's not for Santori, even if it's not immediately now, but in the future. This is a tremendous market for you in China and South Korea. In Japan, you've pretty much maxed up what you can do. You are already so big. So it's a great interior. It's part of the negotiation for RCEP and Japan will get lots of benefits because we can export to China quite a lot and zero target item will be increasing over 10 to 20 years. So that should happen. From that perspective, I'm so optimistic. But there is a huge headwind led by the United States. There are so many trade packs. As a matter of fact, the IPEF is not trade packed, which means China shows it's opening the market. I think they can alleviate the strong headwind from many countries led by the U.S. I think definitely China has to demonstrate its commitment within a couple of years after zero COVID. So I think that's the key. That's my point. And I want to be optimistic because Japan will get a huge benefit and the Santori will get... So we are on the same boat, but what about China? Okay, now let's move to the other big sort of elephant in the room for all people now. And that is inflation. The immediate idea, though, is you think, hey, you've got this fantastic trade deal, as Minister pointed out, 30% of global GDP is covered now by RCEP. Is RCEP, or for that matter, any trade deal? Is it going to be able to help push down prices so that people won't find it so expensive to buy things? If I was going to be cruel, I would now switch over back to Tark and say, you have recently raised the prices for soft drinks across the board. That's pushing prices up, and that's for ordinary people who want to buy an energy drink, a lovely boss coffee. Yeah, that's right. We have to respond to the current jeopardy of the global supply chain. Though Japanese people are not resilient enough to accept a further price hike, but I think definitely manufacturers have to pass on to customers to understand, depending on the situation of each country. But I think this supply chain jeopardy will continue. Plus, our yen is weaker and weaker, but I'm not happy that consumers are not accepting. Well, consumers are not happy that you've raised the prices. At all. So be fair on the other side. Professor, yes. So, I mean, if the IMF's got this right, the reason we're getting inflation in a lot of countries is too much demand chasing too few goods. So one way to fix that is to have more goods coming in. So trade is a broad, sourcing from abroad is one option. And secondly, of course, as demand is diverted towards imports, this relieves the pressure on domestic markets. So trade could actually be part of that solution. There's a really interesting debate going on in the US now about exactly this with interesting divisions within the Biden administration on this. Now, I'll be frank, trade deals are not the cure for inflation, and trade reform is not going to solve inflation overall, but it can make a positive contribution to the prices of some aspects. And as I'm sure our colleague will highlight, the more stable and fluid supply chains are, the more reliable they are, then, of course, that sourcing from abroad will expand. And so I think there is a trade dimension. There's a trade contribution here. But, you know, governments have got to grasp it. Hey, we're talking about... That's one of the things that I know that you've looked at, and that is, you know, that fundamental question. Am I going to get, you know, the dress I ordered, the new year piece that I want to have? Am I going to get it reliably, and am I going to get it delivered cheaper? Yes. Are we? Yes. Well, hopefully soon. This is a non-answer, but it is incredibly complex right now because those inflationary pressures of the too much demand chasing not enough supply, the core of that issue has to do with China, and it has to do with the global reaction of transportation dislocation that we've experienced in the last years. Because if I am a business at any point in a long supply chain and I'm caught out, I don't receive my inputs on time, I can't deliver to my customers, that is extremely bad for my business. So what do I do? I start to hoard and I start to stockpile. And we've seen that consumers doing this throughout the pandemic, and that blows up the working capital at every link in a supply chain that lowers their margins. So everyone is increasing prices. It's a vicious circle. But if we get more reliability, and this comes back to the what about China? Because once China is active and back to business as usual, RCEP will act a bit as an Asia for Asia, giving shorter, more stable supply chains that cushion the region and member states from shocks in the rest of the world like what we're seeing in Europe. Minister, do you agree Asia for Asia? Oh, this is by default because I think this is also to teach, to tell everyone that we have to come back to trade. Ms. Lien, I call for a special Asian Economic Minister, a special meeting, so this is not in the agenda last week in Bali, to make sure that every single one of this Asian Minister in the same page with everyone, to make sure that we have to come back to trade, we have to come back to economy, and don't let this divergence be that politics, security, whatever. We have to come back and create a regional, peaceful, inclusive and prosperous region. But Minister, then we come to that question. Indonesia has banned the export of palm oil. That is a security issue, but for many you might call that a protectionist issue as well. You know, I say this, okay? That's why I said it depends on who's saying it. You know, when the European, when the Americans, when the developed countries doing it, for example, do you know at one point, back in July, last July, they have the European owns 3.7 more vaccines than the populations, 3.7 times more, and they call it security. When Indonesia is doing it, that's protectionism. So, come on, let's go over that, you know, and let's do this because at the end of the day, we are serving the democracy that we are coming from. And the democracy in Indonesia is 270 million people. They're loud and they have what they call new things. They call social media. And this is an oh my God. Okay, well, let's take an overview on that, Professor. You actually track protectionism, stroke security. Is the minister giving a fair review of this? He was comparing vaccines with palm oil. I mean, we've tracked both, actually. And I mean, I don't pick sides on Europe versus Asia. We track what the government's doing. I hope you accept that. He's not picking sides. He's right to say that we have seen export curbs in both areas. I think the vaccine export curbs and the curbs on shipping vaccine ingredients to the extent that they happen were very bad public policy and something we should have avoided. But I think the point to put back to the minister is, look, we've seen how bad vaccine export curbs are. We're now seeing how bad food export curbs are. Don't we need a new global understanding on when these curbs should be used, how long they should be last, how long and whether or not they should be tracked systematically by the WTO Secretary, because none of that's happening at the moment. We did it on the 28th of April. We allow it on the 23rd, so it's done, finished. So we are teaming it back. When you said that understanding, who should start first? The developed country or our developing countries? This has to be global, right? How a global world? What happens in Indonesia matters in Europe, what happens in Europe matters in Indonesia. So we have to have everyone there. Professor, the issue is right now, I don't want to be the one start or not to start, but right now Indonesia is a country in a run. We need to double the GDP before the end of the decades, because we are a middle class and if we don't do this trajectory of 5.7% every year, we will be trapped in the middle income trap. I have a set schedule and I need to jump up the value chain every year and I have set up things. COVID didn't help. But right now, my biggest... I wouldn't say enemy, my biggest trading partner that does not comply with that called the European Union. And because of that, I have two right now dispute in the dispute settlement body. Before the end of the semester, I'm going to have four and we predicted at least we're going to have eight by the end of the year. If we don't have multilateral trading system, countries like Indonesia cannot be guaranteed that we can be served with a good ruling of multilateral trading system. So right now, what they say is when Indonesia is doing it, it's protectionism. But at the end of the day, this is national interest. We're feeding our people. So with that, Indonesia would like to come back. If everyone is behaving well, we are going to behave well too. Along with ASEAN countries, we are going to do that. But my agenda with my ASEAN colleagues is set. We have to go up the value chain. Can I say here that? Indonesia is the G20 president this year. You are in the chair. You could put this on the agenda and get the big players to start talking about how they could first build trust amongst themselves and come up with a new understanding on the use of these tools. Are the developed countries like Japan playing by different rules? Well, as a matter of fact, what lacks AOSEP is the strict system to monitor what's happening. For example, we don't have such a system, just like yours. I think the key success factor of AOSEP is we should not create big winners. We should not create big losers. That is the key point to maintain AOSEP going forward. So I think in the UK, maybe we should have a dialogue among AOSEP members. That's a system. And if Japan exports too much to cause a problem to your country, maybe it's a system to talk, monitor. Maybe Japan is too good. Too big, benefiting too much. We have to adjust. Otherwise, we can't keep AOSEP going forward. So we need a strict system. I'm talking about enforcement. And somebody has to do it, but we have to work together, such as the committee to talk about what's wrong, what's good, to better all of this system. And I think from first day of the AOSEP, I don't think nothing is perfect. But over time, we have to streamline for the better. In the case of the security, we have to discuss. Trade deals can never be enforcement, Hark. I don't think anyone would think that a trade deal can actually function if you have to bully your members into doing what they agreed to do. That's the set of mind, Miss Lin. This is the problem with development. When somebody is developing, somebody is like a reserve, this is like a bottle, the water would go on the development side. Is it a zero sum game? It's not a zero sum game. When there is a development here, there is a D development somewhere else. So that is why the developed countries would like to say, everyone has to win a little bit. I can. I can. You are at $42,000 GDP. I need to double this to $10,000. And this is the matter of national security and the matter of survival. If I don't do this, my democracy will fail. I can't do that. So I need to go up the step and I need to do this. Miss Lin, I have to do two things. I need to invest in infrastructure and second is technology transfer. So this is the recipe. So I need to source this technology from somewhere else. If you don't give it to me, if the Japanese didn't give it to me, I'm going somewhere else. And that's what we are doing. I think we are giving you lots of aids over time. And we are trying to work with you quite a lot over years. 50 years ago, yes. But today, I don't need your aid. I told the European they can take away the cooperation agreement that we are talking right now. It's OK. Your country, among the 13 countries, divisions of roles. That's the destination of this trade deal. I can see there's real passion in this and I hope this passion is also felt in our audience. Is it a zero sum game? Can we actually have trade deals that are really a benefit to all? I know it's a cheesy thing to say but are they really win-wins taking away from another the poorer person can only get richer by taking something away from the richer person? Or do we actually believe that unfortunately there is a certain amount of that? So I'm going to throw this to our wonderful audience here and see if we've got any questions. Yes, we have two questions here. I'm so sorry. There will be a small bias here in favour of the beautiful woman with the lovely red OB. I'm sure that next time when you are wearing your traditional costume I will prefer you. But yes, please. Just state your name quickly and your question please. Hello, thank you. My name is Atoka. I'm a global shaper from Japan. As per the discussion, China seems to be the centre of all these key problems of the global supply chain and inflation. I understand that in this interconnected world it's inevitable that one big country would affect the entire world. But then what do you think how should various stakeholders play a role so that they will be not reliable on China and solve its own problems without having to be kind of reliable on the reopening of China? We'll take that one question first and then we'll move on to and we'll try and pack these two questions in nicely. Thank you very much. My name is Taizuke Sasanuma. I'm running a private equity fund management in Japan and then I've been expanding my business to China and Asia so I have a very strong sense of issues in this matter. Recently Japan, US and Australia and India made agreement, QUAD. And then this is explicitly targeted how to compete with China types of issues on the purpose, right? So I would like to ask questions and in my sense especially how would this QUAD agreement be influential on actually movement or development of RCEP? Then how would finally eventually Japan, China business relations should be influenced by this movement? Okay, I think that actually we can collapse the two questions into one and that seems to be a general apprehension that China is so big and therefore only when it is fully online again can we all benefit as well in a way and that is of course a very, very tricky question. I can see again we've got strong responses here. Minister so is the only answer only when China comes online again in a big way that's going to kickstart RCEP or is it because without them it's just no point? I'm going to revisit a little bit. The trade deal is an enhancement so we can create a prosperity that is fair and beneficial for everyone. So that's the philosophy. My trajectory has to do with national planning of what we are going to do with international relations, international relations deals and now I just don't get it. Why everyone thinks that China is the problem? If China is the problem it's an opportunity for Indonesia so I said it's good. Why are you just investing in the countries in one basket? People say don't put your eggs in one basket so everyone can learn and we have an inflow of investment. If you look at the Rupiah right now we are very strong. Why? Instead of dollars coming out actually foreign money is coming in for investment. So again I look at it as an opportunity and a country need to put themselves positions well. Second, talking about IPF IPF is a different thing. IPF is a norms and standard with no market access. So they want to create a gang and they want to invite Indonesia to be in a play gang. Okay, let's play. Let's draw together. But at the end of the day this is a norm standard, no market access so people understand. But for the United States to come back to the region and balancing the region it's very important in Indonesia welcome that this as an inclusive region, peaceful and also prosper. So that is a line. And this is a destination. So Tuck, we are back to this argument you know, is the is the Orangina cup half full or half empty? So you know the way you're focusing in you keep hacking at China you'll keep focusing on the half empty. But really the opportunity actually to even while China is tackling a zero COVID policy it's still an opportunity for Japan and for Centauri. Well, we have to keep the coupling effort to some extent because we can't anticipate when China will open. So we will shift to some extent to for example, Indonesia that's a great opportunity. But China is too strong for example, to get supply almost 100% from China and can we build a new factory in Indonesia within a couple of years? It's almost impossible. So no, I mean because economy skill totally different because China can enjoy the domestic economy skill which is really strong. So realistic I live in business, minister. So that's my part of answer. Going back to Sunilson's question Kuwait, I pay I think you're right. It's not a trade deal. It's a kind of a strategic geopolitical you know packs led by United States. However as for the semi-conductor or just like security issues I think it means a lot for the member countries and this I think India is an issue. They are not very much positive to join the trade issues at all. Professor, you do international trade but you know also it's always very closely linked to security issues of other kinds. How do you differentiate? How do you say that's a protectionist trade that one has got to do with some kind of security issue? Well the smart thing to do is just to avoid the rhetorical trap. Don't call it protectionism. Just the right way to look at this is does a measure discriminate against foreign firms compared to domestic firms and that's the test we always use and then if someone wants to give it the P word label that's up to them. I think we've been around long enough to know that words like security have been used to mask discrimination against foreign firms and that's the bit which is worrying. On the broader question of IPF I too share the view it is great that the Americans are back. Now they're obviously figuring out under what terms they can do with cooperation with other countries if they can't do a traditional trade deal but that's fine. Let them go through this process of discovery. They appear to want to do interesting things on the digital economy which must be important for all the countries in the Asia Pacific region. Let's engage with them on that and see where it goes. I see a much more constructive trajectory going ahead. I know that you use blockchain technology as well for a lot of your staff but can you ever say to you, you know what, I don't want to use blockchain because blockchain is basically disseminated. It's all over the place and it's not controlled by one grouping. I want something secure that is only by my ex-national thing that I feel is safe. Do they say that too? Absolutely. And actually our distributed ledger is a private ledger for that reason exactly. Both, you know, that issue as well as commercial interests. Blockchain cybersecurity is nascent. It's very difficult to say I have a fully secure public blockchain. I can't put a hand on hard to say that. And anyone who does, I'm very skeptical. So, you know, there's an issue of trust amongst nations an issue of trust amongst businesses but I don't think it's a zero sum game. I think technology drives innovation that creates value and standard setting while it may seem kind of trivial and academic but until standards are set around technology and right now a lot of that needs to be around digital technology you can't deploy at scale. Innovation can't spread and so its rewards are isolated. Now that can be an opportunity for innovators and businesses and countries who see a gap in an opportunity and say hey, China is out of business right now I have an opportunity I'm going to grab it but then it's limited in scales if there are the right international standards for interoperability in both digital data formats and the information that needs to cross borders turbocharges trade. I think one of the dangerous things is that we are now saying that we only trade with friends well can't you actually also say that I don't really mind whether you're a friend or a foe I just want a reliable trading partner and to take away the sense of always having to use these terms which have become very emotive and in fact are no longer commercial and don't have very clear targets like the trade minister has here of really increasing GDP creating jobs for people do we need to stop using these terms friend or foe and instead look at the numbers see if it creates jobs see if it actually makes life for ordinary people better what do you think well this is I don't know maybe I'm too trade friends or foe who's cheaper who's better I buy from them period and that's a fact of life that's why but at the end of the day people company pick the cheapest the best and at today time it's the Chinese it's a fact of life but an aspiration for a country like mine if they can do it why can I and that's a destination also so professor do you think that's the case do countries when they do trade actually take away that all the rhetoric the friend foe the feeling touchy feely bits and only look at the numbers when they do the protectionism I think countries when they make policy decisions look very much at their own national interest for sure I think the dynamic we're seeing of people talking about friends and foes is very dangerous this is a recipe for fragmenting the world trading system I know the national security hawks in various places are pushing this but we are I think those of us who are interested in a system which is transparent open predictable really need to stand up and say wait a minute how much prosperity are we going to sacrifice on the altar of some illusionary promise of national security okay sadly we're going to have to do a last round of questions so I'm going to go through very quick if we look at our sep would you say that it is better to have it than not to have it yes I do I think it'll take time for the fruit to ripen on the tree but it's we've already got the blossoms there it's coming professor it's a step forward for exactly these reasons yeah definitely it should be better for the member countries and we work together to trust each other minister you get the last word I got just one this is the money where my mouth is so that is the key where's the dough you know Indonesia has a saying if you're not acquainted there's no love now we got acquainted I'm seeking for your love wonderful and on that wonderful note we need more love ladies and gentlemen there has been much much too much isolation disappointment companies going out of business people going out of jobs I hope very much that we can move forward to something that's more positive and this lively engage panel and the wonderful audience around me actually reassures me that we can go forward to perhaps a bumpy 2022 but definitely a 2022 where we can keep our heads a little bit higher ladies and gentlemen thank you very much and thank you for being at the greatest or the biggest trade deal in the world