Arab world can't afford to ignore new regional trade pacts such as the Regional Comprehensive Economic Partnership (RCEP) agreement that is expected to change the global trade equations. Image Credit: Reuters

The US-China trade conflict is getting fiercer after the former’s withdrawal from the newly created Regional Comprehensive Economic Partnership (RCEP) agreement, which brings together 15 Southeast Asian and Pacific countries as a new trading bloc. The US withdrawal was matched by India, which pulled out fearing a flood of cheap Chinese goods. The latest skirmish follows trade spat dominated by measures and countermeasures that damaged the interests of the US and China in equal measure… and on global trade as well.

Washington’s and Delhi’s pullout from the world’s largest trade bloc has left the door open to China, which supports the agreement that involves economically important countries such as Australia and Indonesia, in addition to technologically advanced South Korea and emerging powerhouses Malaysia and Vietnam.

The bloc also includes Brunei and Singapore, which is one of the world’s largest trade and financial hubs.

Build its influence further

China is expected to make the best use of its position, gargantuan economy and trading power to promote its ambitious Belt and Road project - a trade-focussed initiative that aims to tap an extended market of 2.2 billion people - or 30 per cent of the world’s population and making up 30 per cent of global GDP.

Although there is another trade agreement involving the US - the Trans-Pacific Partnership - the US-China tensions have hampered its implementation, giving the new agreement, which was signed last weekend, a better chance. Especially since China has no strong rival within this alliance after the withdrawal of the US and India.

The agreement is aimed at reducing customs tariffs and facilitating easier trade as well as shared interests in e-commerce, telecommunication and investments.

Divergent interests

It was not easy to reach such an agreement between countries with conflicting approaches within a limited geographical region like the South China Sea. This was clearly expressed by Malaysia’s trade minister, who said “After eight years of negotiations, blood and tears we have finally come to see the moment where we seal the RCEP Agreement.”

In addition to the gains accruing to the countries involved in the RCEP trade agreement, it could be seen as a gain for China in its competition with the US. The deal will strengthen China’s geopolitical position which may prompt the new US administration to reconsider its withdrawal from the agreement and left the field without a rival to the Chinese dragon.

Any new trade agreement manifests in the rise of new powers and the decline of traditional forces. This requires all countries to rebuild their alliances based around these developments. Whoever controls trade routes and corridors, especially the maritime ones, will have geopolitical gains.

Economic interests are what drove these 15 countries to come together top priorities, as evident from the mix of countries. And they were not perturbed by the US withdrawal. They remained despite some of them grappling with China on geographical reach.

Face the reality

In the context of this global trend, the Arab world seems to be living on another planet, as if they are not concerned about economic and commercial gains that can lead to improved living standards and job creation.

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Arab countries have been experiencing sectarian, ethnic, chauvinistic and tribal conflicts that led to the total collapse of the economies of some countries, such as Syria, Lebanon, Iraq, Yemen and Libya. Meanwhile, others are witnessing sharp divisions that have affected their economic growth.

The course of the global economy and the protection of interests is proceeding according to new alliances. Those who go swim against the current will find themselves outside of the times, and condemned to living in poverty and underdevelopment.

- Mohammed Al Asoomi is a specialist in energy and Gulf economic affairs