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Luis Salgado

RCEP: The treaty that could drive the United States out of the Asia/Pacific

- On November 15, the largest free trade agreement in history was consolidated.

RCEP: The treaty that could drive the United States out of the Asia/Pacific

Negotiations that would end in the Regional Comprehensive Economic Partnership (RCEP) lasted almost a decade. However, and through a virtual ceremony in Hanoi, on November 15 the largest free trade agreement in history was finally consolidated. This is a by no means insignificant event, since the 15 members of the RCEP constitute about [one third]( commercial-world-2020111812417) of world GDP. In addition to this, the agreement has a certain symbolic value due to the global context of crisis in which it is presented.

Interestingly, opinions regarding the treaty are strongly polarized. There are those who point out that it is an agreement lacking in ambition and, therefore, in force. Others are less severe in the sections of the treaty and ensure that it is actually a success. This is because it is a first step towards a new regional order where China leads the Asia/Pacific region without any restrictions.

Certainly, the agreement injects an air of commercial freedom in the region, the momentum of which could lead to more robust agreements. In addition, the merit of the RCEP in "uniting" in a single entity the various existing bilateral agreements between the members of ASEAN (Association of Southeast Asian Nations) cannot be denied, as well as the fact of bringing together in the same agreement to China, Japan, South Korea, New Zealand and Australia.

The list could have been joined by India, which was present throughout the negotiations but withdrew from them last year. This out of caution and respect for Chinese industrial power – before which the Indian economy has a trade deficit of approximately $50 billion dollars. Indian Prime Minister Narendra Modi asserted that the negotiations did not reflect faithfully the initial principles of the RCEP and that for this reason he would withdraw his State from the negotiations.

His departure dealt a severe blow to the pretensions of the agreement – not only would it have been the third largest economy in the RCEP, but it is also one of the states with the fewest bilateral treaties. With this in mind, the delegations extended the invitation to India to meet at some point in the future. Although such an event is expected to be unlikely given the confrontational fronts that Modri and Xi maintain in various fields, the dispute in the Kashmir region being the most mediatic.

RCEP and TPP without the United States

Something that did not go unnoticed by the media, as well as by various academics, was the connection between the RCEP and the TPP (Trans-Pacific Partnership). With negotiations in more than 20 work groups, this free trade agreement sought to reduce tariffs among its members by up to 90%, establish a common intellectual property framework, and standardize labor conditions among the signatories.

A great promoter of the TPP, which is now known as the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) was the United States, since it represented a great opportunity to strengthen its presence in the region, as well as having a counterpart to the treaty that it maintained with the European Union - TTIP (Transatlantic Trade and Investment Partnership). The governments of Gerge W. Bush and Barack Obama ensured that the agreement was finalized. However, during his campaign, Donald Trump promised to withdraw the United States from the agreement and, as soon as he took office, signed an executive order to that end.

Although there is no consensus on whether such action harmed the US economy, it is taken as a fact that the hasty exit from the agreement gave China the opportunity to increase its influence in the region. In addition to this, the Asian States are at a crossroads because, in their eagerness to develop their production and industrial chains, they are submerged in a strong dependence on China.

China and the RCEP – Long-Term Strategy

The critics of the RCEP assert that an agreement with members such as Japan, Singapore and South Korea should have been deeper in terms of tariffs and trade. They affirm that reductions close to 80% are not entirely convincing when they are only valid for 20 years. In addition, countries like China and Japan seem to be the big winners, since, for example, the latter managed to maintain tariffs on products classified as "politically sensitive": rice, wheat, beef, pork, and sugar.

China is without a doubt the biggest beneficiary of the agreement: it is its first multilateral trade agreement, which could not have come at a better time. With the United States distanced from the region and which maintains a kind of commercial dispute with the Asian dragon, China will be able to increase the economic symbiosis in the region that it has opted for since the last decade. It is not for nothing that the ASEAN bloc became China's largest trading partner, surpassing the European Union – which held that title for much of the new millennium.

Recent models by Peter Petri and Michael Plummer envision the RCEP generating [economic revenue]( worlds-biggest-trade-agreement) for more than $186,000,000,000 dollars in its first decade of existence alone. However, small players in the region such as Laos and Myanmar keep an eye on the negotiations between China, Japan and South Korea. If an agreement is reached between the 3 parties, the United States could have lost its last opportunity to guarantee its presence in the Southeast Asia and Pacific region. With an elected president full of commitments to the international scene such as the Paris Agreement and Iran's Nuclear Program, a scenario is looming where the abandonment of the so-called hegemon could become a mistake as fatal as few have been in the history.

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Salgado, Luis. “RCEP: El tratado que podría expulsar a Estados Unidos de Asia/Pacífico.” CEMERI, 20 sept. 2022,