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15 countries signed the RCEP agreement via video on Sunday. Image: keystone
Trump’s solo effort is China’s good fortune – that brings the RCEP free trade zone
The RCEP free trade agreement is a success for the Chinese. Its influence in the Asia-Pacific region is growing at the expense of the United States. Future President Joe Biden faces a challenge.
Analysts and observers agree: China scored a coup by signing the Regional Comprehensive Economic Association (RCEP) on Sunday. Almost four years after the United States withdrew from the Trans-Pacific Partnership (TPP), the world’s largest free trade zone was created under Chinese leadership.
This made clear “the failure of US President Donald Trump,” said Michael Hüther, director of the Institute for German Economics in Cologne, the “Handelsblatt.” While Trump has largely turned his back on the Pacific region and China has declared a trade war, Beijing continues to expand its influence in its “backyard.”
What is RCEP?
Textile factory in China: The new agreement aims to stimulate trade, which has been held back by Corona. Image: keystone
After eight years of negotiations, the agreement was signed in a crown-related videoconference. It comprises 15 states in Asia and the Pacific, which cover 30 percent of world economic output, 30 percent of world population, and 28 percent of world trade. Therefore, the RCEP constitutes the largest free trade area in the world.
It includes the ten ASEan states: Vietnam, the Philippines, Singapore, Indonesia, Malaysia, Thailand, Myanmar, Brunei, Laos, and Cambodia. There are also Australia and New Zealand, as well as China, South Korea and Japan. This is seen as particularly symbolic as historically based resentments still exist between the three countries.
What does the agreement want?
Mainly it foresees a complete dismantling of tariffs and trade barriers. That facilitates mutual trade and supply chains. In other areas, RCEP is much less ambitious. According to experts, the opening of the service sector hardly goes beyond the standards of the World Trade Organization.
Important aspects such as environmental protection, workers’ rights or state aid are largely excluded. The same applies to the protection of intellectual property, for which China is repeatedly criticized. The agreement will “more formalize than renew” economic relations, writes the New York Times.
Who is not there?
Indian Prime Minister Narendra Modi walked out of the negotiations in July. Image: keystone
The big absentees from the RCEP are fewer of the United States than India, which will soon overtake China as the world’s most populous country. India withdrew from the negotiations in July because it fears competition from cheap Chinese products and in agriculture from imports from Australia and New Zealand.
China, in turn, wanted to prevent sectors such as textiles and shoe production, which provide many jobs, from migrating to cheaper India. The armed border conflict between the two rival powers in the Himalayas in the summer also weighed on the talks. However, India’s door to RCEP is not closed.
What is the United States doing?
On January 23, 2017, Donald Trump ordered the United States to withdraw from the TPP. Bild: AP
Shortly after taking office, Donald Trump decided to withdraw from the Trans-Pacific Partnership (TPP) negotiated by the Obama administration. It was motivated by dislike of its predecessor and free trade. Obama had explicitly pushed for the TPP as a counterbalance to China’s growing influence.
The eleven remaining members (Australia, Brunei, Chile, Japan, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam) formed the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP). This agreement goes beyond the new RCEP alliance on some points.
What is Joe Biden doing?
President-elect Joe Biden spoke Monday about his plans for economic recovery. Image: keystone
The newly elected US president emphasized his willingness to confront China’s influence on world trade in an economic policy speech on Monday. Joe Biden left open whether this could mean membership in CPTPP or even RCEP. He wanted to present his plan the day after he was sworn in, January 20, 2021.
For observers, Biden is in a dilemma. Under Trump, the United States has lost influence in the Asia-Pacific region. At the same time, you must take into account the critical climate of globalization in your country. According to the New York Times, analysts believe that business contracts will not have a high priority for President Biden.
What does RCEP mean to us?
Like the EU, Switzerland is linked to RCEP members through bilateral agreements, including China, Japan and South Korea. But that does not mean easier access to the free trade zone. On the contrary, according to the Tamedia newspapers, it could become more difficult. On the contrary, the expected growth could boost the export of Swiss products.
