Meanwhile, the economic dimensions of the FOIP have remained secondary, ranging from modest investments and a plan to exclude China from supply chains to the evaluation of infrastructure projects, often funded by China. The US approach has angered ASEAN and other East Asian friends and forced countries to make unnecessary and risky political decisions. RCEP will become the world`s largest trade deal, measured by the GDP of its members – nearly a third of global GDP. India and the US were supposed to become members of RCEP and CPTPP, respectively, but withdrew under the Modi and Trump administrations. As the agreements are now configured (see Figure 1), they stimulate intra-Asian integration around China and Japan. This is partly the result of American policy. The United States must rebalance its economic and security strategies to promote not only its economic interests, but also its security objectives. In retrospect, the Trump administration`s Asian policy focused on a new vision of the free and open Indo-Pacific (FOIP). As the experts noted, the principles of the FOIP – an open, inclusive and peaceful region – were in line with established U.S. policy. But the government`s tactics then focused on isolating China from regional economic networks and prioritizing quad-focused security measures (Australia, India, Japan, and the United States). When RCEP was signed, Chinese Premier Li Keqiang declared it a “victory for multilateralism and free trade.” [7] Singaporean Prime Minister Lee Hsien Loong called it “a big step forward for our region” and a sign of support for free trade and economic interdependence. [15] Some media outlets have called RCEP a China-led effort, but analysts say this is inaccurate.
“It hasn`t even been dominated by China in a long time, even though China is the largest economy in the deal,” said Michael Green, senior vice president for Asia at the Center for Strategic and International Studies. He cited Japan and ASEAN members, including Singapore, as drivers. RCEP is not as comprehensive as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, another free trade agreement in the region that includes some of the same countries. [9] RCEP “does not establish uniform standards for labour and the environment and does not commit countries to opening up services and other vulnerable sectors of their economies.” [16] “It really doesn`t offer any kind of disciplines or constraints that would change China`s economic model,” says Chad Bown, a trade economist at the Peterson Institute for International Economics. RCEP is the first free trade agreement between China, Japan and South Korea, three of Asia`s four largest economies. [9] At the time of signing, analysts predicted that this would help stimulate the economy amid the COVID-19 pandemic, “bring the economic center of gravity back to Asia,” and amplify the U.S. economic and political decline. [7] [10] [11] However, the report notes that the overall negative impact for some RCEP members does not mean that they would have been better off staying out of the RCEP agreement. The effects of trade diversion would nevertheless have accumulated. RCEP will also accelerate the economic integration of Northeast Asia. A spokesman for Japan`s Foreign Ministry stressed last year that negotiations on the trilateral free trade agreement between China, South Korea and Japan, which has been stalled for many years, will take action “as soon as they are able to conclude the RCEP negotiations.” In a high-profile speech in early November, President Xi Jinping promised to “accelerate negotiations on an investment agreement between China and the EU and a free trade agreement between China, Japan and South Korea.” Southeast Asia will benefit significantly from RCEP ($19 billion per year by 2030), but less than Northeast Asia, as there are already free trade agreements with RCEP partners.
However, RCEP could improve access to China`s Belt and Road (BRI) funds and improve market access gains by strengthening transport, energy and communication links. RCEP`s favourable rules of origin will also attract foreign investment. UNCTAD`s analysis shows that the impact of RCEP on international trade will be significant. “The emerging bloc`s economic size and trade dynamics will make it a center of gravity for global trade,” the report said. The impact of RCEP is impressive, even though the agreement is not as strict as the CPTPP. It creates incentives for supply chains across the region, but also responds to political sensitivities. Its intellectual property rules contribute little to what many members have, and the agreement says nothing at all about labour, the environment or state-owned enterprises – all key chapters of the CPTPP. However, ASEAN-centric trade agreements tend to improve over time. A second option for the United States is to fully reintegrate regional economic networks in addition to an active role in security. For example, the United States could join the CPTPP and approve its rapid expansion to Indonesia, the Philippines, South Korea, Thailand and the United Kingdom.
==References=====External links===Markets and technology make these deals attractive and could persuade China to join in the long run (we estimate big gains if so). But current U.S. policy seems to offer little support for this approach. In a joint statement, RCEP member leaders said the signing of the agreement demonstrates “our strong commitment to supporting the economic recovery” after the pandemic slows down with job creation and “open, inclusive and rules-based trade and investment.” The agreement aims to reduce tariffs and bureaucracy. It contains uniform rules of origin across the bloc that can facilitate international supply chains and trade in the region. [14] [15] It also prohibits certain tariffs. It does not focus on trade unions, environmental protection or government subsidies. [14] “The economic benefits of the agreement may be marginal for Southeast Asia, but there are interesting trade and tariff dynamics for Northeast Asia,” said Nick Marro of the Economist Intelligence Unit (EIU). Figure 1: Regional trade agreements selected by economic size (share of world GDP) The agreement covers several areas of cooperation, with tariff concessions being a central principle. It will eliminate 90% of tariffs inside the bloc, and these concessions are essential to understanding the initial impact of RCEP on trade, both inside and outside the bloc. In comparison, the other major regional trade agreements per share of global GDP are the South American trade bloc Mercosur (2.4%), the African Continental Free Trade Area (2.9%), the European Union (17.9%) and the agreement between the United States, Mexico and Canada (28%). In 2016, the Electronic Frontier Foundation described RCEP`s first draft intellectual property regulation as “simply the worst copyright provisions ever seen in a trade agreement.” [71] Although China has already concluded a number of bilateral trade agreements, this is the first time it has signed a regional multilateral trade pact […].
