by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Within weeks of his 2016 election victory, President Trump announced plans to withdraw the U.S. from the Trans-Pacific Partnership (TPP), a multilateral trade deal intended to build an economic bulwark against China. That decision paved the way for this weekend’s signing of the Regional Comprehensive Economic Partnership (RCEP), a free-trade agreement between China and 14 Asian neighbors.
The RCEP — signed by the ten members of the Association of Southeast Asian Nations as well as Australia, China, Japan, New Zealand, and South Korea — covers 2.3 billion people, making it the largest-ever trade agreement, even after India’s withdrawal scaled it back. Though of marginal material consequence to the global economy, its signing represents another step in China’s march to regional dominance.
The RCEP will phase out most tariffs between member countries over a 20-year period, a provision that essentially replicates existing trade arrangements. Indeed, previous deals with much more comprehensive and stringent rules have already achieved most of the trade liberalization included in the RCEP, muting its effect. …
… It does, though, contain one significant provision instituting a common rule of origin. Whereas previously businesses had to attain various certifications to ship products between member countries, they now need just one so-called certificate of origin. That makes supply-chain management easier and could incentivize companies to locate more of their production in the region. …
… Still, the sheer extent of the trade zone should worry Washington, which has missed opportunity after opportunity to convert the grievances of China’s neighbors into meaningful policy victories. If previous ASEAN agreements are any indication, the scope of the RCEP is likely to expand over time. And those nations most willing to partner with the U.S. against China — Japan and South Korea — rank among the largest beneficiaries of the agreement.