RCEP: Between geopolitics and geo-economy

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(MENAFN- Asia Times)

The Regional Comprehensive Economic Partnership, whose negotiations began in 2013, will enter into force this Saturday, January 1, 2022.

The RCEP ratification process required at least six countries of the Association of Southeast Asian Nations and three ASEAN dialogue partners to ratify it. Although it was signed in November 2020, only Thailand, Singapore, Cambodia, Brunei, China and Japan had ratified the RCEP in November 2021. Subsequently, Australia and New Zealand have it. ratified on 2 and 3 November respectively, paving the way for the conclusion of the agreement. effective from January.

The agreement comes into force in a specific historical context. While there is a consolidation of Chinese economic engagement in the East Asian region, there are also increasing violations of the gray zone by Beijing around the Senkaku Islands and Taiwan and in the sea. from southern China. The RCEP thus highlights the divergences between regional economic frameworks and geopolitical trends.

The RCEP negotiations began at a time when there were many changes in the international order. In the economic realm, China overtook Japan as the second largest economy in 2011, while in the geopolitical realm, China’s territorial claims and its activities in the South China Sea have raised serious concerns.

In July 2016, the Arbitral Tribunal of the Permanent Court of Arbitration for the South China Sea ruled that China’s rights to the resources of this body of water were “replaced by the limits of the sea areas provided” by the United Nations Convention on the Law of the Sea.

The Trans-Pacific Partnership (TPP) was signed in February 2016, and it was expected that the pact could result in restricted economic space for China. However, there was a dramatic turnaround in US foreign policy under then-President Donald Trump as Washington formally withdrew from the TPP shortly after taking office.

Trump’s decision to leave the TPP has been baffling to many, including the United States itself. Six U.S. ambassadors to the region wrote an open letter to Congress in 2017 asking it to support the TPP.

China, on the other hand, sensed an opportunity to step up its economic engagement in East Asia following the US withdrawal from the TPP and amid growing friction in Beijing’s relations with Washington. Other economies in the region have also been troubled by erratic US policies under Trump.

In this context, the first RCEP summit was held in Manila in November 2017. India participated in the negotiations until November 2019, but chose not to sign the agreement due to concerns about the barriers not being signed. tariffs, the absence of strict rules of origin and the lack of access for India’s service sector.

Since the advent of Covid-19, there has been a fundamental shift in Beijing’s economic and security outlook. Wolf Warrior’s diplomacy has come to the fore, and there are also concerns about over-reliance on China-based supply chains.

China’s relations with countries in the region have also seen increased friction. Additionally, China has sought to use coercive economic diplomacy for political ends, which has shifted perceptions of countries participating in multilateral frameworks with Beijing as the dominant partner.

Despite the RCEP, concerns about deeper economic engagement with China persist. Even though Tokyo ratified RCEP in June this year, it has made an effort to get Japanese companies to move production out of China. In South Korea, there is growing anti-Chinese sentiment and public unrest around Chinese activities.

Australia’s relations with China have also been difficult at best in recent years. Amid hostile rhetoric from Beijing, Canberra signed a trilateral security pact with the United States and United Kingdom (AUKUS) in September.

Given growing security concerns, it was possible that RCEP could have been delayed if member countries delayed ratification. Washington’s role on the issue – whether it has tried to persuade its allies not to ratify the RCEP – is unclear.

It seems that many RCEP member countries assumed that it was possible to continue economic relations with China and also create geopolitical frameworks to contain China. However, geopolitics and economic architectures cannot be decoupled, and nation states must take a close look at geopolitical challenges and the likelihood that economic architectures can be used for political ends.

More recently, China has also applied to become a member of the revamped Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP). There is speculation as to whether China will be able to meet the strict standards for state-owned enterprises and industrial subsidies.

However, China’s candidacy may receive favorable consideration if a group of countries are willing to repeat the familiar argument that China should be allowed into the tent. As experience with the World Trade Organization shows, once allowed in, China may not always adhere to the rules of the game, in letter or in spirit.

There are arguments in favor of the United States joining the CPTPP. Asked about a possible US participation in the CPTPP last month, US Trade Representative Katherine Tai said “neither yes nor no”. Given the national political dynamics, joining the CPTPP and having it ratified in Congress would be a challenge.

More recently, US officials have referred to an “Indo-Pacific economic framework” without providing details. Given the recent dissonance in US politics, translating intention into politics will take considerable time.

With the RCEP coming into play in the new year, the process of divergence between emerging economic and geopolitical architectures that began in 2013 will reach a tipping point.

Beijing will attempt to consolidate its economic forays into the greater East Asian region under the rubric of RCEP. However, the Chinese economy has faced many challenges, including concerns about lower growth rates. The Evergrande debt crisis has exposed deep and structural challenges plaguing the Chinese economy.

RCEP will give China greater space to solve its domestic economic problems. On the other hand, the dependencies created by the RCEP will mean that the domestic economic crises in China will also be felt in the member countries of the RCEP, with greater intensity in the long term.

The opinions expressed here are personal.

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