There are two articles below and in the modules section), one discussing the US withdrawal from the Tran Pacific Partnership (TPP) trade negotiations and a second discussing the Regional Comprehensive Economic Partnership (RCEP). The RCEP was originally the Chinese version of the TPP but now contains many of the countries that were to be TPP participants.
Your job is to evaluate the merits of the US decision to withdraw and the China’s reaction of embracing the leadership for, in effect, recreating the TPP without the US but with some staunch US allies.
There are both political and economic aspects to the actions of the US and China. Use the discussions in class and the other readings assigned concerning trade as well as your ongoing reading of the news. Your assignment is not meant to present an exhaustive review of what has happened and why it happened. It is to demonstrate knowledge of trade, the resulting politics, and the implications for the future…in 2 pages.
The paper is due by 11:59 PM on Sunday March 7. Submission will be though “Turnitin”. Be forewarned: “Turnitin” looks for plagiarism from published papers, and documents from around the world. Plagiarism is not dealt with by the instructor but by the department! Be smart and do your own work…which will make you smarter.
Bring a hard copy to class, please.
As Trump retreats on trade, China moves in
America’s traditional partners already are turning to Beijing.
1/24/17, 8:49 PM CET
Updated 1/27/17, 8:42 AM CET
U.S. President Donald Trump’s crusade against China seemed to backfire on Day One.
Throughout his election campaign, Trump made clamorous promises to challenge Beijing’s ascent to global dominance. He vowed to hold the country to account over currency manipulation and cozied up to Taiwan. He accused Beijing of saber-rattling in the South China Sea and of supine support for nuclear-armed North Korea.
But Trump’s first big move on trade policy — an executive order to withdraw (Links to an external site.) from the Trans-Pacific Partnership, a trade deal among 12 Pacific Rim countries — is set to play straight into China’s hands as it seeks to become the undisputed regional power. Angry over the move, America’s traditional trade partners have already this week reached out to Beijing to forge closer commercial ties.
China is perfectly placed to move into the empty space created by the U.S. withdrawal.
Ironically, one of the overriding strategic goals of the Trans-Pacific Partnership had been to triangulate a U.S.-led trade policy that would set technological and regulatory standards in Asia, which China would be forced to follow. The accord was a key plank of President Barack Obama’s “pivot to Asia.”
European Trade Commissioner Cecilia Malmström also criticized Trump’s protectionist policies on trade and said his policies were “doomed to fail.”
For the U.S., the biggest risk now is not that China joins the Trans-Pacific agreement itself, but that Washington loses leverage over China to tackle the very business practices that Trump repeatedly criticized during his election campaign.
“TPP is an agreement designed for the U.S. way of doing business, with strong rules on state-owned enterprises, electronic commerce and enforceable provisions on labor and environmental standards,” said Chad P. Bown from the Peterson Institute for International Economics. The TPP withdrawal “is losing a lot of leverage toward China.”
Carrying on without Trump
Trump’s departure from TPP has sparked howls of protest from the other 11 members, and Australia immediately mentioned that there could be room for China to play a role. “The original architecture was to enable other countries to join,” Australian Trade Minister Steven Ciobo said Tuesday (Links to an external site.), adding that “there would be scope for China.”
Only hours after the executive order, Chile announced (Links to an external site.) that it would invite China and South Korea to a meeting of the TPP countries in the coastal resort of Viña del Mar in March to discuss the future of the agreement without the U.S.
“The TPP as it was going forward is off the table. That doesn’t mean that Chile is going to change tack. We are going to press on in opening up of the world … as we did in the past, with bilateral deals, and regional deals,” Chilean Foreign Minister Heraldo Muñoz said.
Singapore, Malaysia and Mexico all insisted they would continue to explore ways to keep the Trans-Pacific Partnership alive among the remaining members.
Chinese Foreign Ministry spokeswoman Hua Chunying said Beijing’s priority would now be to forge ahead with its own alternative (Links to an external site.) to TPP, known as the Regional Comprehensive Economic Partnership (RCEP), Chinese state media reported. After Trump signed the order, both Singapore and Malaysia said that they would look to deepen trade ties with China.
No choice but China
In Washington, alarm bells sounded.
Republican Senator John McCain warned (Links to an external site.) that Trump’s move risked handing the Asia-Pacific region to the Chinese.
“They have now a very significant economic role, where 60 percent of the world’s economy is in the Asia-Pacific region, and we are stepping back,” he said in an interview with CBS News.
“I have talked to leaders of Asian countries who have all said that this will cede the field to China. And that, to me, is not good for the United States of America,” he added.
Countries such as Japan and Vietnam have strong strategic and security worries about China that could make a broad deal unlikely.
European Trade Commissioner Cecilia Malmström also criticized Trump’s protectionist policies on trade and said his policies were “doomed to fail.” (Links to an external site.)
Peter Chase, a senior fellow at the German Marshall Fund of the United States, agreed that Trump had made “a strategic mistake taken for the wrong reasons.”
“With Mr. Trump talking about China not playing by the rules, the whole idea of TPP was trying to encourage and nudge China in that direction and now that leverage is gone,” he added.
China would be reluctant to sign up to TPP itself as it would not welcome such rigorous trading standards, said Chase, who described RCEP as “a relatively thin deal. It doesn’t have anywhere near the disciplines that TPP has.”
The Trans-Pacific Partnership could also prove a difficult format for Beijing for other reasons: Countries such as Japan and Vietnam have strong strategic and security worries about China that could make a broad deal unlikely.
But Karel De Gucht, the former European trade commissioner, told Belgian television (Links to an external site.) on Tuesday that Trump’s decision would leave countries in Asia no choice about which way to shift their trade policy.
“The countries in the region now have no choice but to rely on China. They have no alternative,” he said.
Asia forms world’s largest trading bloc RCEP after years of talks
After signing, focus turns to ratification; China to hold sway in India’s absence
Leaders and trade ministers from the 15 Regional Comprehensive Economic Partnership countries pose for a virtual group photo during the signing ceremony hosted by Vietnam on Nov. 15. © AP
KENTARO IWAMOTO, Nikkei staff writerNovember 15, 2020 13:57 JSTUpdated on November 16, 2020 00:58 JST
SINGAPORE — Fifteen countries spanning the Asia-Pacific region on Sunday signed the Regional Comprehensive Economic Partnership agreement, creating the world’s largest trading bloc that promises to help speed up the members’ post-pandemic growth.
The 15 countries are China, Japan, South Korea, Australia and New Zealand, along with the 10 members of the Association of Southeast Asian Nations. Together, they account for around 30% of the world’s gross domestic product and population.
This marks the first time China enters a nonbilateral free trade agreement of this scale. Coming at a time when the U.S. is less enthusiastic about joining global trade deals and talks on a post-Brexit trade deal between the European Union and the U.K. stall, Asia looks to take the lead in shaping the new global trade architecture.
The newly signed free trade framework extends beyond trade to set common rules and standards for a range of economic activitiy.
RCEP will take effect after at least six ASEAN countries and three non-ASEAN countries ratify it.
Sunday’s signing ceremony was held online, hosted by this year’s ASEAN chair Vietnam. With national leaders looking on, economic ministers from the 10 members of the Southeast Asian bloc signed in alphabetical order, followed by the five other countries. They held up their documents for the other participants to see over the video feed, each drawing applause from an audience in Hanoi.
“I am confident that RCEP will soon be ratified and come into force, further bolstering our post-pandemic economic recovery and delivering shared prosperity to the people and businesses of all participating countries,” Vietnamese Prime Minister Nguyen Xuan Phuc said after all countries signed.
RCEP was officially proposed in 2012, and the talks had dragged on since 2013. Progress was especially slow in the early years, but the discussions gained momentum after Donald Trump became the U.S. president in 2017. Amid a growing trend of protectionism, the participating governments became more motivated to promote free trade.
An exception was India, which was initially involved in the negotiations but withdrew last year, as it was reluctant to open up its agricultural and other key sectors.
The agreement, which the members described as “modern, comprehensive, high quality, and mutually beneficial,” includes 20 chapters of rules covering everything from trade in goods, investment and e-commerce to intellectual property and government procurement.
The deal will eliminate tariffs on a wider range of goods flowing between the participants, while ceilings on foreign shareholdings will rise in more service industries, such as professional services and telecommunications. The e-commerce chapter aims to enhance consumer protection and safeguard personal information, as well as promote acceptance of electronic signatures.
This marks the second big multilateral trade deal for Asia, following the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP — the 11-member version of the TPP, forged after Trump pulled the U.S. out. Seven of the 15 RCEP members belong to the CPTPP as well.
Some members are also already linked by bilateral free trade pacts, such as the one between ASEAN and China. RCEP can thus be seen as a framework joining together existing deals.
But in some respects, the pact also brings historic breakthroughs.
For China and Japan — Asia’s largest and second-largest economies — RCEP is the first free trade agreement to connect them. Tariffs on 86% of Japanese goods exported to China will be eliminated, up from the current 8%. This promises big benefits for Japanese manufacturers, such as automobile parts suppliers.
The global health crisis only adds to the gravity of the moment.
The signing came as the world economy continues to suffer from the chilling effects of COVID-19. While China, South Korea and Vietnam have shown quicker recoveries, many Asian countries continued to record economic contractions in the July-September quarter. So on Sunday, members expressed hope that RCEP would play a key role in the region’s long-term recovery and prosperity.
“The signing of the RCEP agreement is a timely boost to the long-term prospects of the region,” Singapore’s Trade and Industry Minister Chan Chun Sing told reporters on Sunday. “It will be a bright spot that points to the direction ahead.”
He said Singapore will ratify it “very soon, in the next few months.”
Malaysia’s International Trade and Industry Minister Azmin Ali said in a statement: “Undoubtedly, it represents a significant and imperative milestone in the integration and revitalization of economies of the 15 parties.”
Philippine Trade Secretary Ramon Lopez told reporters on Saturday that RCEP “offers wider market opportunities for our exporters and service providers.” He added that RCEP countries account for more than 50% of the Philippines’ export market.
An analyst who spoke with Nikkei Asia agreed that the deal is significant — particularly given the prolonged impact of COVID-19 and the uncertain aftermath of the U.S. presidential election.
“Trade is an important driver of growth for RCEP members,” said Cassey Lee, a senior fellow at Singapore-based think tank ISEAS-Yusof Ishak Institute. While economic recoveries will be slow for many countries, he said, the deal will give signatories more trade and investment opportunities.
“This will put these countries in a good position to leverage and mutually reinforce their economic recovery together in the future,” Lee said.
For China, RCEP aligns with President Xi Jinping’s new economic strategy of “dual circulation” — refocusing on domestic demand while taking advantage of trade and foreign investment.
Chinese officials have been pushing for multilateral deals in the past few months, illustrated by a number of high-level meetings, both physical and virtual. Beijing has also vowed to further open up trade and investment as it aims to become a “high-income country” by 2025 and a moderately developed economy by 2035.
“We will continue to reduce the negative list that bars foreign investment access,” Qian Keming, China vice minister of commerce, told a forum on Thursday. He went on to say that multinational companies will be encouraged to participate in high-tech sectors and development projects in China’s less-developed central and western regions.
Beijing also hopes RCEP will provide an impetus for other multilateral deals currently in the works, including a China-European Union investment treaty and a China-Japan-South Korea free trade agreement.
Without India, China is the biggest RCEP participant by far, both in terms of GDP and population. It looks poised to wield plenty of clout in the bloc as a result — a factor that apparently made some governments reluctant to go ahead if New Delhi could not be enticed.
“Japan at first said it didn’t want to sign if India is not there because RCEP becomes too China-dominant without India,” one ASEAN diplomatic source said on condition of anonymity. “But now it said yes, because there is no choice.”
The 15 members formally left the door open for India to join later. Japanese Prime Minister Yoshihide Suga said at Sunday’s RCEP meeting that Japan will take a leading role in working to bring the South Asian country into the fold.
Indonesian President Joko Widodo said that the signing was only the beginning, adding that the members still have to make efforts to implement the deal. “This also requires political commitment at the highest level,” Widodo said. “For Indonesia, we still open opportunities for countries in the region to join this RCEP.”
Yet, the odds of India ever joining are hard to gauge.
“As far as India is concerned, we did not join RCEP as it does not address the outstanding issues and concerns of India,” Riva Ganguly Das, a secretary in the Ministry of External Affairs, said during a virtual media briefing on Thursday. “However, we remain committed to deepening our trade relations with ASEAN,” she added without elaborating.
Separately, former Indian Foreign Secretary Kanwal Sibal tweeted on Saturday that the RCEP signing is “most inopportune.” He said this “Signals countries not only can’t delink themselves from China but [are] ready to deepen [economic] links” with it.
Additional reporting by Kiran Sharma in New Delhi, CK Tan in Shanghai, Kim Jaewon in Seoul, Cliff Venzon in Manila, P Prem Kumar in Kuala Lumpur, Bobby Nugroho in Jakarta and Masayuki Yuda in Bangkok.