Mon, January 24, 2022

perspective

With TPP’s demise, RCEP must prove it is agile and inclusive


US President-elect Donald Trump has made it official: He will tear up the proposed Trans-Pacific Partnership (TPP) free-trade initiative launched by outgoing President Barack Obama once he moves into the White House on January 20.

How does that affect Thailand? For one thing, Bangkok probably did the right thing in deciding not to join TPP’s founding group of 12 members led by Washington.
We supposedly “missed the train” and had been scrambling to jump on the bandwagon at the last minute. But now that the train has derailed, it’s time to reflect on the next step and the wide-ranging political and economic implications that will follow.
Thailand has already joined the 16-member Regional Comprehensive Economic Partnership (RCEP) spearheaded by China, which so far has been hazy over how the benefits of free trade will be spread among members. But since it’s the next train due to leave the station, there is a lot to be said for making this multilateral trade and investment vehicle a reality.
If Trump keeps his pledge to do away with the TPP in the name of protecting American jobs, most analysts believe the move will leave a power vacuum in Asia, which would be immediately filled by China.
That could see a major shift in the balance of power in the region. Chinese academics have been quoted as saying that America’s withdrawal from the TPP would offer “great opportunities” for China to work out a wider trade agreement as a better alternative.
They suggest that Beijing should seize the opportunity to launch a free-trade area in the Asia-Pacific that incorporates countries that have joined both the TPP and the RCEP.
Perhaps China could even take the step of inviting the US to join the China-led Asian Infrastructure Investment Bank (AIIB) in order that Washington won’t be left out of the loop for the next big leap in international trade and investment cycles.
But it’s not necessarily all good news for China. Other experts say that the TPP’s demise will inject momentum into Beijing’s proposed trade pact but that could dent hopes of putting pressure on China to undertake real reforms.
New York University professor Ian Bremmer was quoted by South China Morning Post as saying that the death of TPP would make Beijing “less resolute” in areas ranging from reform of state-owned enterprises to the free flow of information.
If the US pulls out of the TPP, that could embolden China to remain assertive in areas such as cyberspace control and state intervention in the economy, the paper quoted analysts as saying.
Bremmer added: “If you are a single-party government … if you grow economically in the last 35 years ... there is risk involved in opening up in China to Facebook, Google and Twitter. There is risk involving losing control of data.”
The scrapping of TPP could be a “double-edged sword”, says Zhao Minghao, a researcher with the China Centre for Contemporary World Studies.
Its failure could hurt free trade in general, while also boosting a China-initiated RCEP that does not require Beijing to make painful domestic changes.
Another analyst suggested that external pressure from the TPP’s high standards on labour and the environment would not have necessarily been bad for China.
Foreign Ministry spokesman Geng Shuang told reporters recently that China welcomes all free-trade measures that can improve economic integration in the Asia-Pacific region.
A recent China Daily editorial suggested, perhaps tongue-in-cheek, that Chinese companies should not thank Trump for abandoning the TPP: “They should thank Obama for having not included their country in it in the first place – and for having prevented them from labouring to adapt to the rules that would only be overturned later.”
The writer argued that the RCEP had in fact been launched by the Association of Southeast Asian Nations. “It was not of Chinese design that the United States is not part of it. Nor has China said it wants to close the door on the US,” the commentary said, adding: “China has had enough experience to understand that [this] would be highly impractical.”
In the end, Trump the president will be quite different from Trump the candidate. His campaign was built on turning the US into “Fortress America”. It might have delivered him a stunning victory, but America can’t be “great again” if his policies put the most powerful nation on earth back a century in terms of economic engagement and security preparedness.
The TPP may be history, but Thailand together with other Asean members should strive hard to turn the RCEP into a more “inclusive” club that accommodates as many diverse interests as possible, with no particular major power dictating the terms and conditions of this new mega-free-trade arrangement.

Published : November 30, 2016

By : Suthichai Yoon The Nation