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The United States took the initiative of the Trans-Pacific Partnership (TPP) under President Barack Obama ten years ago. Free trade cooperation was to put the United States in the driver’s seat. Strict requirements for the environment, labor rights and copyright should make it difficult for China to become a member.
One of the first things Donald Trump did when he became president was withdraw the United States from the TPP negotiations.
China responded by putting all its economic and political weight on the competitive Regional Comprehensive Economic Association (RCEP) agreement. This weekend the agreement was signed with 15 Pacific countries.
– This is not only a milestone for regional cooperation in East Asia, it is also a victory for multilateralism and free trade, said Chinese Premier Li Keqiang during the signing of the agreement, which took place via video conference in which the leaders participated.
Free Trade Winner
The RCEP member states, which include China, Japan, South Korea, Australia, and all Southeast Asian countries, account for nearly a third of the world’s population and 30% of global value creation.
– This is an important step forward for our region. At a time when multilateralism is losing ground and global economic growth is slowing, the RCEP deal shows Asian countries’ support for open and connected supply chains, freer trade and closer interdependence, said the Prime Minister of Singapore Lee Hsien Loong.
According to a report by the Peterson Institute for International Economics, the trade agreement will increase value creation for member states by nearly $ 200 billion over the next ten years. It is expected to be ratified in the next 18 months.
“From a global perspective, this indicates that the Asian region continues with trade liberalization even though other regions become more skeptical,” Fred Neumann, HSBC’s head of research, told the Financial Times.
The region represents the highest economic growth in the world. All 15 countries have gained control of the corona pandemic and are in the process of rebuilding their economies.
Reconstruction after crown
Investors in Asian stock exchanges have started the week celebrating what they see as positive news for the entire region. The main indices of the Tokyo, Seoul and Sydney stock exchanges rose about 1.5 percent in the morning local time.
– Our trade policy is to support Australian jobs and facilitate export opportunities. One in five jobs depends on the trade. The RCEP deal will be very important when Australia and the region begin to rebuild after the corona pandemic, Australian Prime Minister Scott Morrison said.
India pulled out of the negotiations in 2019, but the deal allows the country, which is expected to bypass Japan and become Asia’s second-largest economy, to become a member at a later date.
“The clause allowing India to become a member later is symbolic and shows that China wants to build a bridge to the third-largest economy in the region,” Chief Economist Shaun Roache of S&P Global Ratings told Bloomberg.
Customs duties and taxes must be eliminated on at least 92 percent of all products between member countries. At least 65 percent of the service sector must be fully opened up with the removal of ownership restrictions for foreign shareholders.
Trump’s historic actions
President Donald Trump will pursue a tough policy in China in recent weeks to cement his legacy, according to the Axios news website. The goal is to make it as difficult as possible for Joe Biden to change China’s policy.
“Unless Beijing changes course and becomes more globally responsible, it will be like political suicide for future US presidents to reverse President Trump’s historic actions,” National Security Council spokesman John Ullyot told Axios. .
Trump started the trade war with China in 2017. Both countries have imposed punitive tariffs and various sanctions on the other side. Tech company Huawei has been disrupted and has been unable to sell the most advanced smartphones outside of China since last year.(Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We want you to share our cases via a link, which leads directly to our pages. Copying or other use of all or part of the content can only be done with written permission or as permitted by law. For more terms, see here.
