A shallow deal
Some commentators have suggested that RCEP has created a China-led economic bloc. Those assessments are a misreading of the situation. RCEP is a shallow project. It does not contain rules for the protection of either the environment or workers. Compared to the other big trade agreement in the region, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), RCEP is much less ambitious and covers fewer contested areas. For instance, CPTPP has resulted in lower levels of protection for agricultural products in Japan. Since Australia and New Zealand, key exporters of agricultural products, are already members of CPTPP, there is no additional benefit for them in RCEP, at least with regard to trade in agricultural products.
More importantly, RCEP does not restrict the participating economies in their future trade policymaking. Unlike the European Union, which is a customs union that results in a unified trade policy of all European countries, RCEP continues to permit the participating economies to conduct their own trade strategy. Australia, for example, can conclude a free-trade agreement with the European Union if it wishes to do so. If RCEP constituted a customs union, the picture would be different. But in today’s political climate, it is hard to envisage that countries such as Australia or Japan would enter a customs union with the People’s Republic of China. RCEP is as close to Beijing as negotiators were willing to get.
High level of support for globalization
It is striking, nevertheless, that RCEP faced little, if any, political opposition in the participating economies. The main reason for the silence of civil society is that RCEP comprises what, at the risk of over-simplification, could be described as a coalition of “winners of globalization”. Today, societies in the Asia Pacific continue to demonstrate a high level of support for trade liberalization and a deep international division of labor. Whereas the old champions of globalization – primarily most of the developing countries in the West – are tired and wary, many Asian societies show a remarkable desire for more, rather than less globalization. In polls, Vietnam and the Philippines have continuously recorded the highest levels of support for globalization. For the populations in most RCEP countries, more trade is not a threat but an opportunity.
Thus, the often heard claim that the EU and the USA must now act and liberalize their own trade policies is a false and apolitical demand. Donald Trump won the 2016 election because he emphasized the negative effects of globalization for American blue-collar workers. In 2020, the support for a protectionist US trade policy may have risen further. President Joe Biden will not enjoy a lot of support for any free-trade policies, both within his Democratic Party and among US voters.
Europeans often assume that their countries are the champions of free trade. But of course, the EU is every bit as protectionist as the US. Trade in agriculture is severely restricted in Europe, and so is trade in some selected sectors, for instance in the automotive industry. Once the Covid-19 crisis is over, it is likely that the EU will further tighten its trade policy, for example, by introducing tariffs that penalize the importation of products that are not produced in a climate-friendly way. Needless to say, the supporters of that approach do not consider those policies as protectionist but rather as inevitable for saving the planet.
The signing of RCEP is a positive signal – that many societies continue to support trade liberalization. But RCEP will not change the future of international trade. It will provide some much needed administrative relief for companies and will facilitate trade in the region. All the political issues that have made deeper economic and political integration in the Asia Pacific difficult if not impossible continue to exist. RCEP will probably mark the high-water mark of integration in the region but it will not represent the emergence of an Asia-Pacific economic and (much less so) a political union.