Hao Dinh / AP
President-elect Joe Biden said on Monday that the United States should align itself with other democracies in order to write the rules governing global trade – not China.
He was responding to a journalist’s question about whether the United States should join a major trade agreement, the Regional Comprehensive Economic Partnership, which 15 countries from Asia and the Pacific signed on Sunday.
RCEP unites China, Japan and South Korea in a trade deal for the first time and includes 10 countries in Southeast Asia plus Australia and New Zealand.
This leaves the United States, with the largest economy, and India, the largest democracy, on the sidelines of one of the world’s largest trade blocs – even as China deepens trade and investment partnerships in the region and around the world.
Collectively, RCEP members make up 2.2 billion people nearly a third of the world’s population, and a similar share of the global economy and trade, to me Association of Southeast Asian Nations or ASEAN. The Peterson Institute for International Economics estimates The new deal could grow the global economy by about $ 186 billion annually.
After eight years of difficult negotiations, the Regional Comprehensive Economic Partnership Agreement has arrived with the outbreak of the Coronavirus pandemic on the economies of member states. In Indonesia and the Philippines, for example, the total number of confirmed cases of coronavirus has reached nearly 900,000, and lockdowns containing the virus have forced millions of people to leave work.
in a Joint statementLeaders of RCEP members said that the signing of the agreement “demonstrates our strong commitment to support economic recovery” from the epidemic downturn, with job creation and “open, inclusive and rules-based trade and investment.”
The agreement will facilitate investments and reduce already low tariffs among member states over time. It will provide modest benefits initially, according to Deborah Elms, founder and CEO of the Singapore-based Asian Trade Center. “Not everything will be cut. Not everything will go to zero. The schedules are too long for some sensitive products,” she says.
For example, Japan will keep tariffs on rice, wheat, dairy products, sugar, beef and pork to protect its farmers. Reported by Bloomberg.
The deal could have been “more ambitious,” says Elms, “but that’s a very diverse group of 15”, which mixes rich countries like Japan and Australia with poor countries like Laos and Cambodia.
Some media have described the RCEP as a China-led effort, but analysts say this is inaccurate. “It hasn’t been dominated by China for a long time, even though China is the largest economy in the agreement,” says Michael Green, senior vice president for Asia at the Center for Strategic and International Studies. He appointed Japan and ASEAN members, including Singapore, as drivers.
India was a party to the talks but withdrew last year.
President-elect Joe Biden did not specifically mention whether the United States should join RCEP in his country Monday conference in Delaware.
But he noted that the United States makes up 25% of the world’s economy, and “we need to be the same as other democracies, another 25% or more, so that we can lay down rules of the road instead of China and others dictate the results because it’s the only game in town.”
He also said, after taking office, environmental workers will be “at the negotiating table for any business deals we enter.”
RCEP does not address labor standards or environmental protection. Nor does it prevent state-owned enterprises from gaining a competitive advantage with government subsidies.
“It doesn’t really provide any kinds of disciplines or constraints that would change China’s economic model at all,” says Chad Bowen, a trade economist at the Peterson Institute for International Economics.
Analysts say another agreement, originally known as the Trans-Pacific Partnership, is more comprehensive than the RCEP. The Trans-Pacific Agreement – which was renamed “inclusive and progressive” to the fore after the United States withdrew and signed the remaining 11 countries – set a high standard for rules, put some restrictions on state-owned companies, cut tariffs, boost innovation and develop the digital economy, he says. Green from CSIS.
President Barack Obama defended the Trans-Pacific Trade Agreement as a hedge against China’s writing of global trade rules for the 21st century. But within days of taking office, President Trump withdrew the United States from the deal, proceeding to impose tariffs on trading partners and start a trade war with China.
a Brookings Institution The blog’s analysis says the Trans-Pacific deal and the new RCEP “will offset the global losses caused by the US-China trade war, albeit not for China and the United States.”
Green says the United States will “regret” being on the sidelines of two major multilateral agreements. This, he says, would give China two advantages: “The first is that it will create a narrative within the region that China is the new leader with the most influence on trade and rule-making. The second is that it will reduce barriers to trade with China at a time when the United States does nothing to reduce barriers. To trade with the United States. “
Former American commercial actress Wendy Cutler referred to other takeaway, Writing in a recent commentaryRCEP is another reminder that our Asian trading partners have developed confidence in working together without the United States.
All of this poses severe challenges for the incoming Biden administration.
Meanwhile, China hailed RCEP as a win. Premier Li Keqiang said, “The signing of the Regional Comprehensive Economic Partnership Agreement is not only a tremendous achievement in East Asia regional cooperation, but more importantly, the triumph of pluralism and free trade.” to me Chinese state media.
However, CSIS’s Green says that the “decisive game” that historians may look back on “is nothing more than twentieth-century tariff cuts, but a twenty-first-century definition of the rules on data, reciprocity, and digital commerce, where the United States plays a critical role. . “
“So, we’re not completely out of the game.”