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Friday, November 18, 2016, 15:39

TPP undone by geopolitical agenda

By China Daily

RCEP Asian trade deal charts slow and steady progress despite likely demise of US-led Trans-Pacific Partnership

The Trump shock is big, extending well beyond the United States. For more than a week now, there has been a flood of commentaries discussing what the president-elect’s Asian policy will look like and the probable winners and losers.

Lots of commentators said that as part of the Obama legacy, the Trans-Pacific Partnership (TPP), an initiative the United States joined to lead in 2008, is a loser.

At the same time, the Regional Comprehensive Economic Partnership (RCEP) — allegedly a China-led initiative — is described as a winner.

A forgotten fact is that neither of these free trade zone deals has really existed. The TPP was originally an agreement of four countries, Brunei, Chile, New Zealand and Singapore, in 2005. It was not until 2008 that Australia, Canada, Japan, Malaysia, Mexico, Peru, the US and Vietnam joined the discussion for a broader agreement.

The final proposal was signed by heads of state from the 12 countries in February this year in Auckland, New Zealand. A comprehensive 30-chapter agreement was awaiting ratification when the US presidential campaign started. Candidates from both parties detested the deal, Trump being the more fierce critic.

One salient feature of the TPP is its exclusion of China and India. And it does not include all members of the Association of Southeast Asian Nations — for instance, Indonesia and Thailand are left out.

Although no one said openly that China is not welcome, officials of the Obama administration took it at least in part as a political instrument, and repeatedly said (including Obama himself) that it would allow the US, not China, to write the rules for free trade.

But perhaps it is this added political purpose, chased by a government in haste (during the second term of the Obama administration), that will prove to be the TPP’s undoing.

After Trump’s election victory, the Obama administration announced it would no longer try to get the TPP approved by Congress.

An economic deal encumbered with excessive expectations can easily break. Too much unrelated significance attached to a deal can leave the dealmaker distracted and unready. When signing the paper, the dealmaker may actually be thinking about something not even stated in the clauses.

Some Chinese commentators saw the TPP as a disguised US attempt to contain China — although the Cold War concept of containment didn’t quite work back then and certainly won’t work now.

Also, it is wrong to call the RCEP a China game as the US media often does. The RCEP should have been credited to ASEAN, not China.

The RCEP was meant to be a future free trade agreement between the 10 ASEAN member states (Brunei, Myanmar, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam) and the six states with which ASEAN has existing free trade agreements — Australia, China, India, Japan, South Korea and New Zealand.

The RCEP’s major difference from the TPP is easy to see: It includes China and India, but no country in the Americas. Yet it does include Australia and New Zealand, so it cannot be called a purely Asian setup.

No Chinese official has called it a geopolitical defense against the US or asked to hasten its formation to prevent the US from dictating global trade rules.

Nor was there any official statement about which country should be leading the RCEP negotiations, much less be writing its rules. In fact, the RCEP does not cover as many areas as the TPP would have, and therefore does not have as many rules to write about.

Admittedly, some of the areas covered by the TPP are important. But they may well be structured into separate international treaties and be laid out more specifically.

On the other hand, structuring even a seemingly simpler, purer deal like the RCEP is a complicated task. Its negotiations were formally launched at the ASEAN Summit in Cambodia back in November 2012.

And, after 15 rounds of group negotiations starting in 2013, a final agreement is yet to take shape. Perhaps, as with any complicated task, Asians prefer a slow but steadier style of progress.

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