On Sunday, China, together with 14 other countries in its neighborhood, signed The Regional Comprehensive Economic Partnership (RCEP), which has been dubbed the largest trade deal in history, accounting for 30% of global GDP. Ten ASEAN countries, Japan, South Korea, Australia and New Zealand are all on board. ‘The Pact is seen as the extension of China’s influence in the region’ [RCEP: Asia-Pacific countries form world's largest trading bloc]. The election of Trump in 2016 and his ditching of TPP (which was designed to exclude China) increased the momentum of RCEP negotiations. The deal is aimed at eliminating a host of import tariffs in the next 20 years. It also includes provisions on intellectual property, telecommunications, financial services, e-commerce and professional services.
This is the first time China has joined a regional multilateral trade deal, which makes it even more significant. Having dealt with the corona crisis successfully (so far), and engaging in face mask and vaccine diplomacy, this is a major boost to China’s influence in the region. The most significant absentee in the pact is the United States, which is busy licking its (mainly self-inflicted) wounds at the moment. On January 20, the Biden administration will have a major dilemma on its hands about China and such trade deals. Biden wants America to be ‘back’; but how can America be back if it is not part of the region’s trade pacts and their negotiation processes? This problem is further intensified by the increasing anti-globalization sentiments in sizable portions of the US population, which were to a large degree responsible for Trump’s victory in 2016, and which in principle oppose joining such deals. On Monday, Biden suggested that America should join other democracies to set the ‘rules of the road’. It is not clear what that means in terms of trade deals in Asia.
M. Forough
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