The ten ASEAN nations, along with China, Japan, South Korea, Australia and New Zealand signed the Regional Comprehensive Economic Partnership (RCEP) agreement on November 15, 2020. Introduced in 2012, the agreement was finally sealed at the end of Southeast Asian summit, held virtually and chaired by Vietnam. By combining an assortment of agreements among these countries into one, the RCEP brings Asia closer to a coherent trading zone much like the EU. The U.S., as a Pacific power, is missing from the pact.
Arguably the largest free trade agreement in history, it covers nearly a third of the world’s population, 30 percent of global GDP, and marks a major step towards the economic integration of the Asia-Pacific region. Most remarkably, this is the first time China, Japan and Korea – business competitors – have been tied together in a single trade deal. The RCEP will spur inter-Asia trade further, which is already larger than Asia’s trade with North America and Europe combined.
India has negotiated with the other interlocutors from the conception of the pact but decided to quit in 2019 when the concessions it sought in the service sector, which India has a relative advantage in, from the other interlocutors did not materialize. Well-aware of the size of India’s economy and the size of its market, the RCEP members have kept the door open for India to join. As the RCEP matures it may be useful to expand the pact and also include countries like Bangladesh, Pakistan and Sri Lanka as part of the wider Asian region.
The agreement also comes amid questions over Washington’s absence from two of the biggest trade partnerships in the world’s fastest growing region, and raises questions over the real motives of American involvement in the region. Trump had earlier pulled the U.S. out of Trans-Pacific Partnership, which the other interlocutors went ahead and signed as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP.) East Asian countries have forged ahead, instead of becoming hamstrung by American refusal to partner in multilateral trade agreements.
Skipping the East Asia summit for the third year running, Trump snubbed Asia’s leaders sending only his relatively low-ranking National Security Advisor Robert O’Brien to represent the U.S. in a virtual summit.
While the White House distances itself from the region, China’s quick revival of its economy following its handling of Covid-19 will further pull the global center of economic gravity towards Asia, where China has enhanced its partnership status. The China-backed RCEP would give a much-needed impetus to the pandemic-hit economies of the region.
As China’s economy recovers post-pandemic, Beijing’s influence will increase in the region, at the expense of the U.S. and the EU – the traditional economic superpowers. Alexander Capri of the National University of Singapore Business School believes that membership of the RCEP "solidifies China's broader regional geopolitical ambitions around the Belt and Road initiative".
The U.S. choosing to stay away from two of the biggest trade pacts that encompass Asian region, the fastest growing in the world, demonstrates that the U.S. is still unwilling to learn from the experiences of the Japanese economic surge during the 1970’s and 1980’s. Instead of improving competitiveness the U.S. then relied on its geo-strategic muscle, arm-twisting Japan into obedience to correct what the Americans thought was Japanese gate-crashing into the U.S. market. Now, when the U.S. faces even bigger competition from China, the U.S. finds to its dismay that it is unable to restrain the Chinese competition. Again The U.S., instead of improving its economic competitiveness, is busy building military blocs like the Quad, comprising the U.S., Australia, Japan and India against what it alleges China’s assertiveness.
The signing of the RCEP also demonstrates that despite the U.S. stoking fear of China amongst East Asian countries, some of which are close U.S. allies, the regional players are coalescing around a mutual agenda focused on multilateralism, trade, sustainable development, and climate change. These interests are best pursued via collaboration on shared interests, and will trump military alliances America is hoping to build.
The whole think-tank industry in the US - the largest in the world - continues to feed into the grand American delusion that “the rest of the world will have to make fundamental adjustments to American power and influence,” according to Kishore Mahbubani, the distinguished fellow at the National University of Singapore. The reality now is that it is America’s need to adjust and adapt.
The incoming Biden administration, which is likely to bring stability to America’s relationships abroad, will find a different Asia. Countries in East Asia especially are leading international initiatives, and feel they can shape their own future without America’s participation, said Professor Chan Heng Chee, Singapore’s former ambassador to the U.S.. Instead of forcing choices the U.S. should consult, listen to, and respect their preferences.
The U.S. has tremendous potential to contribute to common good. It will be beneficial for all if the U.S. joins the global consensus without being paralyzed by the American rivalry with China, and become a partner in the peaceful rise of Asia-Pacific during the twenty-first century and beyond.