Time needed to unlock new Asia-Pacific trade pact's potential to be a game changer

By Josef Gregory Mahoney
0 Comment(s)Print E-mail Beijing Review, November 24, 2020
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The signing ceremony of the Regional Comprehensive Economic Partnership (RCEP) agreement is held via video conference in Hanoi, capital of Vietnam, Nov. 15, 2020. [Photo/Xinhua]

Some experts caution it's easy to overestimate the economic, political, and geostrategic significance of the newly signed Regional Comprehensive Economic Partnership (RCEP) and how it may transform Asia and global affairs. On one hand, the agreement is more structure than details at this point, and the global economy and multilateralism face tremendous headwinds presently. On the other hand, the same was true when the World Trade Organization (WTO) rose from the ashes of the General Agreement on Tariffs and Trade, and more so with the founding of the Association of Southeast Asian Nations (ASEAN) and other agreement-based international orders becoming major drivers of regional and global development.

Economic significance

Economically, the RCEP is a larger trading bloc than the U.S.-Mexico-Canada Agreement (aka North American Free Trade Agreement 2.0) and the EU, and some estimates project it might push the current 15 signatories to a combined GDP exceeding $100 trillion by 2050 from the more than $26 trillion at present.

The agreement reduces and even prohibits some tariffs, cuts red tape and includes unified rules of origin that will above all benefit the region's intensively interconnected supply chains. Nevertheless, critics argue that the agreement is not, in fact, "comprehensive," as it largely avoids concerns for the environment, worker protection and government subsidies—all potentially serious sources of friction as the agreement moves forward, both in the upcoming period of ratification in individual countries and beyond.

However, these omissions reflect the reality of uneven levels of economic and national development between the signatories, which is comparatively extreme in some cases, as well as the shared conviction that moving forward where feasible at this point supersedes squabbling over, essentially, those same differences.

Indeed, the hope is that the economic benefits that come from the agreement will help improve conditions nationally and regionally, and through development and growth those problems will be addressed. And when disagreements emerge, the agreement will provide a framework for resolving them. That said, despite proliferating intersections, no one agreement can address all problems. Progress on the environment, for example, can be made on other fronts. The Paris Agreement on climate change also includes all of the RCEP's signatories.

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