How din / ap
President-elect Joe Biden said Monday that the United States must join other democracies so that they can write the rules governing world trade – not China.
He was answering a reporter’s question about whether the United States should join a major trade deal, the Regional Comprehensive Economic Partnership, which 15 Asia-Pacific countries signed on Sunday.
For the first time, RCEP brings together China, Japan and South Korea in a trade deal and includes 10 countries from Southeast Asia plus Australia and New Zealand.
This leaves the United States, with its largest economy, and India, its largest democracy, on the sidelines of one of the world’s largest trading blocs – even as China deepens trade and investment partnerships in the region and around the world.
A total of 2.2 billion RCEP members make up nearly a third of the world’s population and a similar share of the global economy and trade, according to the Association of Southeast Asian Nations or ASEAN. The Peterson Institute for International Economics estimates that the new deal could potentially boost the global economy by $ 186 billion a year.
After eight years of difficult negotiations, the RCEP arrives as a new coronavirus pandemic hits member economies. For example, in Indonesia and the Philippines, the total number of confirmed COVID-19 infections has reached nearly 900 million, and blockages containing the virus have forced millions to lose their jobs.
In a joint statement, RCEP leaders said the signing of the agreement “demonstrates our strong commitment to support economic recovery” from the pandemic decline, through job creation and “open, inclusive, rule-based trade and investment”.
The pact will facilitate investment and reduce already low tariffs between member states over time. He said Deborah Elms, founder and CEO of the Singapore-based Asian Mall, would provide modest benefits from the start. “Not everything will be shortened. Not everything will reach zero. And the deadlines are very long for some sensitive products,” she said.
For example, Japan will maintain tariffs on rice, wheat, dairy products, sugar, beef and pork to protect its farmers, Bloomberg reported.
The deal could be “more ambitious,” says Elms, “but it’s a very diverse group of 15 people” that mixes rich countries like Japan and Australia with poor ones like Laos and Cambodia.
Some media describe RCEP as a China-led experience, but analysts say that is incorrect. “It hasn’t even been dominated by China for a long time, even though China is the largest economy in the agreement,” said Michael Green, senior vice president for Asia at the Center for Strategic and International Studies. He named Japan and ASEAN members, including Singapore, as drivers.
India was a party to the talks, but withdrew last year.
President-elect Joe Biden did not say specifically whether the United States should join RCEP at Monday’s conference in Delaware.
But he noted that the United States makes up 25% of the world economy and, “We need to align with other democracies, another 25% or more so that we can set the rules of the road instead of having China and others dictate the results because they are the only game in town. “
He also said that once he takes office, workers and conservationists will be “on the table in any trade deals we make.”
RCEP does not address labor standards or environmental protection. Nor does it prevent state-owned enterprises from gaining a competitive advantage with state subsidies.
“It really doesn’t provide any disciplines or restrictions that would change China’s economic model at all,” said Chad Bone, a trade economist at the Peterson Institute for International Economics.
Analysts say another agreement, originally known as the Trans-Pacific Partnership, is more comprehensive than the RCEP. The Trans-Pacific deal – which rebranded “Comprehensive and Progressive” in front of its name after the United States withdrew and 11 other countries signed – set high standards for rules, placing some restrictions on state-owned enterprises, reducing tariffs, promoting innovation and developing the digital economy, says Green of CSIS.
President Barack Obama has advocated the Trans-Pacific Trade Pact as a hedge against China, which is writing global trade rules for the 21st century. But days after taking office, President Trump pulled the United States out of the deal and continued to impose tariffs on trading partners and start a trade war with China.
An analysis in the Brookings Institution’s blog says that the trans-Pacific deal and the new RCEP “together will offset the global losses from the US-China trade war, though not for China and the US.”
Green says the United States will “regret” being on the sidelines of two major multilateral agreements. He says this will give China two advantages: “One is that it will create a story in the region that China is the new leader with the greatest influence on trade and rule-making. And the second is that it will reduce barriers to trade with China at a time when the United States is doing nothing to reduce barriers to trade with the United States. “
Former US Trade Representative Wendy Cutler pointed to another way of taking it, writing in a recent comment, “RCEP is another reminder that our Asian trading partners have built confidence to work together without the United States.”
All of this poses serious challenges to the upcoming Biden administration.
China, meanwhile, hailed RCEP as a victory. “The signing of the RCEP is not only a monumental achievement in regional cooperation in East Asia, but more important is the victory of multilateralism and free trade,” said Premier Li Keqiang, according to Chinese state media.
However, CSIS Green says the “critical game” that historians can look back on is “not the reduction of 20th century tariffs, but the definition of 21st century data, reciprocity and digital commerce rules, where The United States is a critical player. “
“So we’re not completely out of the game.”