RCEP has to be more in­clu­sive than TPP

A bal­anced RCEP might be­come the model for fu­ture mega-re­gional trade agree­ments.

China Daily (USA) - - VIEWS -

AlthoughUS Pres­i­dent Barack Obama has urged other Trans-Pa­cific Part­ner­ship Agree­ment mem­ber coun­tries to con­tinue work­ing to ad­vance the agree­ment, the out­look for the TPP is un­cer­tain. US pres­i­dent-elect Don­ald Trump struck an anti-TPP pos­ture dur­ing his elec­tion cam­paign, and has said theUnited States will with­draw from the trade deal on his first day in the White­House.

For the rest of the TPP mem­ber coun­tries the bleak prospects for the trade deal are a great dis­ap­point­ment. While they are ex­pected to con­tinue ef­forts to per­suade the Trump administration to look pos­i­tively at the TPP, they do not ap­pear hope­ful at this point in time. The as­sump­tion among these mem­bers ap­pears to be that theUS would not com­mit to the TPP at least for the time be­ing. This is forc­ing the nonUS TPP mem­bers to con­sider the pos­si­bil­ity of hav­ing a TPP with­out theUS.

Atrans-Pa­cific trade deal with­out theUS is a the­o­ret­i­cal pos­si­bil­ity, which would in­crease if theUS vol­un­tar­ily with­draws from the TPP. At present, the TPP agree­ment re­quires rat­i­fi­ca­tion by at least six of its mem­bers ac­count­ing for a min­i­mum of 85 per­cent of theGDPof the group. This makes it im­pos­si­ble for the TPP to be­come func­tional with­out its rat­i­fi­ca­tion by theUS and Ja­pan— the two largest economies in the group. If theUS with­draws from the TPP, then Ja­pan and the rest of the mem­bers can rat­ify and im­ple­ment it.

But a TPP with­out theUS— the world’s largest econ­omy— would not be as sig­nif­i­cant a trade deal as it is now. The ab­sence of theUS might also lead to newdis­cus­sions on many as­pects of the TPP. NonUS TPP mem­bers were per­suaded byUS ne­go­tia­tors to make sev­eral con­ces­sions for suit­ingUS busi­ness in­ter­ests. These are par­tic­u­larly rel­e­vant for the TPP’s pro­vi­sions on in­tel­lec­tual property pro­tec­tion for bi­o­logic drugs and in­vest­ment-state dis­pute set­tle­ment (ISDS) rules. Coun­tries hav­ing made such con­ces­sions would wish to re­visit them if theUS were no longer in the pic­ture.

Be­sides, non-US TPP mem­bers would be look­ing for­ward to ex­plor­ing other al­ter­na­tive frame­works for re­gional eco­nomic in­te­gra­tion. The most fea­si­ble op­tion in this re­gard is the Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship. Sev­eral non-US TPP mem­bers— Aus­tralia, Brunei, Ja­pan, Malaysia, NewZealand, Sin­ga­pore and Viet­nam— are ne­go­ti­at­ing the RCEP. With more than onethird of the global econ­omy and almost half of the world’s pop­u­la­tion, the RCEP is a pow­er­ful eco­nomic group­ing. In ad­di­tion to the non-US TPP mem­bers, it has China, In­dia, In­done­sia and the Repub­lic of Korea and all the 10 ASEAN economies. The size of the group is large enough to cre­ate one of the world’s big­gest free trade ar­eas of­fer­ing sig­nif­i­cant newe­co­nomic op­por­tu­ni­ties for all of its mem­bers.

As the largest econ­omy in the RCEP, China will have a crit­i­cal role to play in its growth. So will Ja­pan, Aus­tralia and In­dia as the other large economies in the re­gion. Un­like the TPP, which from a geo-po­lit­i­cal per­spec­tive was a group­ing ofUS de­fense al­lies and part­ners, the RCEP is not a col­lec­tion of China’s al­lies. There are some mem­bers in the RCEP with whom China has dif­fi­cult po­lit­i­cal re­la­tions. Go­ing ahead, the chal­lenge for RCEP and its ma­jor mem­bers will be to over­look ex­ist­ing po­lit­i­cal dif­fer­ences and con­trib­ute as co-rule mak­ers in the es­tab­lish­ment of a newre­gional trade frame­work.

A suc­cess­ful RCEP will cre­ate the mo­men­tum for the es­tab­lish­ment of a Free Trade Area of the Asia-Pa­cific. The prob­lems en­coun­tered by the TPP drive home the im­por­tance of work­ing to­ward “in­clu­sive” trade frame­works that try to ac­com­mo­date as many di­verse in­ter­ests as pos­si­ble. Such an ap­proach might some­times pre­vent trade agree­ments from be­ing too am­bi­tious. But it will set in mo­tion a process of grad­ual open­ing up with less po­lit­i­cal re­sis­tance. It would also help in dif­fus­ing the anti-trade sen­ti­ment sweep­ing across the world today. A bal­anced RCEP might be­come the model for fu­ture mega-re­gional trade agree­ments. The au­thor is se­nior re­search fel­low and re­search lead (trade and eco­nomic pol­icy) at the In­sti­tute of South Asian Stud­ies in theN­ational Univer­sity of Sin­ga­pore.

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