Read the original article: Asia-Pacific Trade Deal RCEP Is Signed; Xi Signals Potential Interest in CPTPP
Asia-Pacific Trade Deal RCEP Is Signed; Xi Signals Potential Interest in CPTPP
On Nov. 15, the 10 countries of the Association of Southeast Asian Nations (ASEAN) plus China, Japan, South Korea, Australia and New Zealand signed the world’s largest free trade agreement by population. The pact, known as the Regional Comprehensive Economic Partnership (RCEP), covers more than 2 billion people, and its signatories have a collective gross domestic product of $26 trillion. The deal is China’s first multilateral free trade agreement. President Xi Jinping has since announced that China would also “give positive consideration to the idea” of joining the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP). Together, the announcements signal China’s newly open approach to global commerce.
RCEP aims to reduce tariffs, increase market access and facilitate the development of cross-border supply chains within the bloc. The pact, which took eight years to negotiate, avoids politically charged issues including dispute resolution mechanisms and regulations on environmental impact, labor rights and government subsidies.
Chinese Premier Li Keqiang has touted RCEP as “a victory of multilateralism and free trade.” Some observers have noted that the deal reflects positively on China’s image as a cooperative economic actor. China will likely reap economic benefits from RCEP participation: According to simulations run by the Peterson Institute, China will gain approximately $100 billion in income due to added trade and production in East Asia. The Atlantic Council surmises that the deal is “securing a lower tariff trading environment in Asia without any change to China’s model of state capitalism.” RCEP also fits China’s “dual circulation” strategy, which pairs self-sufficiency driven by domestic consumption with supplemental international connections. Regional supply chains may also augment China’s strength in manufacturing as its domestic economy moves up the global value chain. And, as purchasing power in Asia grows, RCEP is likely to encourage “Asian trade for Asia”—perhaps, as Beijing sees it, regional self-sufficiency to complement China’s national independence.
RCEP’s membership attests to broader international political trends; it is the first trade agreement to join China, Japan and South Korea. The conclusion of the RCEP deal is predicted to jump-start negotiations on a long-stalled trilateral free trade agreement—a tentative sign that the two U.S. allies may be coming together under a Chinese umbrella. And Xi’s announcement regarding the CPTPP comes on the heels of a Japanese statement recommending expansion of the agreement. India was involved in the negotiations until it bowed out last year, citing unresolved “issues of core interest.” Taiwan was also excluded from the deal, and the island’s exports are projected to suffer as a result.
Like RCEP, the CPTPP eases digital trade and the cross-border flow of goods. Wang Huiyao, president of the Center for China and Globalization, has said that Chinese membership in the CPTPP could “mean an end to the suppression of Chinese companies such as Huawei and TikTok when they conduct business abroad.” The CPTPP’s rules are more comprehensive than RCEP’s, particularly on labor and environmental protection. Membership could require China to make some domestic reforms, though the CPTPP’s data localization requirements provide an exception for government services and public policy decisions, and the original Trans-Pacific Partnership’s (TPP’s) controversial
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Read the original article: Asia-Pacific Trade Deal RCEP Is Signed; Xi Signals Potential Interest in CPTPP