Asia-Pacific countries are pushing ahead on a major agreement which could redefine free trade in the region, but its not the deal you’d expect.
All ten member countries of the Association of Southeast Asian Nations (ASEAN) and six partner countries hope to finalize the Regional Comprehensive Economic Partnership (RCEP) by the end of this year, said Thai Commerce Minister Apiradi Tantraporn following the conclusion of the ASEAN Economic Ministers’ Meeting in Laos last week.
The RCEP is a free-trade agreement supported by 16 Asia-Pacific countries, namely China, South Korea, Japan, India, Australia, New Zealand, and the ten members of ASEAN. If the RCEP is finalized, it will become the world’s largest free-trade agreement. It will encompass 3.35 billion people, more than 50% of the world’s population, and $22.9 trillion in combined GDP, 29% of the global total.
The Trans-Pacific Partnership (TPP), President Obama’s 12-country alternative to the larger RCEP, is currently struggling to gain support at home. Congress has indicated that a vote on the TPP may not take place until the start of the next administration, and right now, both presidential candidates are firmly opposed.
Recently, U.S. Trade Representative Michael Froman told Reuters that a failure to ratify the TPP would be equivalent to the US handing China “the keys to the castle.” He added, “We’re one vote away from either cementing our leadership in this region and in the global trading system or ceding it to China.”
Where the TPP has the potential to secure a more permanent position for the US in the Asia Pacific, the RCEP, which is strongly advocated for by China, could prove detrimental to the American position in the region. For the US, the TPP is about maintaining power in the face of possible decline, and for China, the RCEP is a chance to achieve greater power and rise in the Asia Pacific.
For a long time, it was expected that the TPP would be finalized and put into effect before the RCEP, but China, which has been largely opposed to the TPP due to fears that the deal is an exclusive containment strategy disguised as a free-trade deal, is making progress on its preferred agreement.
The RCEP is moving along at an accelerated pace because it is much less demanding than the TPP and is built on a number of existing frameworks, which makes it much more acceptable for regional actors looking for a beneficial free-trade solution. Furthermore, the centralized nature of China’s foreign trade policies, which are very different from our own, makes it easier for China to pursue its strategic ambitions.
Concerning the TPP, there are suspicions that the TPP will protect American corporations over other countries and their people. There is a possibility that this deal could deregulate key areas of business and trigger negative outcomes, especially with regard to general wellbeing and human rights. As the TPP flounders, the RCEP is making clear headway.
An RCEP committee meeting will be held from August 12-19 to discuss some of the remaining issues, such as trade in goods and services, investment, and economic cooperation, for the deal.
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