The ten Asean nations, China, Japan, South Korea, Australia and New Zealand signed the Regional Comprehensive Economic Partnership (RECP) agreements in November 2020. First proposed in 2012, the agreement was finally sealed at the end of Southeast Asian summit, held virtually and chaired by Vietnam.
By combining assortment of agreements among these countries into one, the RECP brings Asia closer to a coherent trading zone like the EU. The US, as a Pacific power, is missing from the pact.
Arguably the largest free trade agreement in history, it covers nearly a third of world’s population, 30 per cent of global GDP, and marks a major step towards the economic integration of the Asia-Pacific region. Most remarkably, this is the first time China, Japan and Korea — business competitors, are now tied in a single trade deal. The RECP will spur inter-Asia trade further, which is already larger than Asia’s trade with North America and Europe combined.
Size of India’s economy
India negotiated with the eventual partners since the beginning but decided to quit in 2019 when the concessions it sought in service sector -- where India has a relative advantage -- from the other interlocutors were not forthcoming. Realising the size of India’s economy and the size of the market, the RECP members have kept the door open for India to join. As the RECP matures it may be useful to expand the pact and also include countries like Bangladesh, Pakistan and Sri Lanka as part of the wider Asian region.
The agreement also comes amid questions over Washington’s absence from two of the biggest trade partnerships in the world’s fastest growing region. Trump had earlier pulled the US out of Trans-Pacific Partnership, which the other interlocutors went ahead and signed as Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). National Security Advisor Robert O’Brien represented the US in a virtual summit. The big takeaway is that East Asian countries have declined to be hamstrung by the American refusal to became partners in multilateral trade arrangements.
China’s quick revival of its economy following its control of Covid-19 will further pull the global centre of economic gravity towards Asia. RCEP would give a much-needed impetus to the pandemic-hit economies of the region. As China’s economy recovers post pandemic, Beijing’s influence is likely to increase in the region. Alexander Capri of the National University of Singapore Business School believes that membership of the RCEP “solidifies China’s broader regional geopolitical ambitions around the Belt and Road initiative”.
Common good with shared interests
The signing of the RECP also demonstrates that notwithstanding the US anxiety over China, some of America’s closest allies are coalescing around a mutual agenda focused on multilateralism, trade, sustainable development and climate change. These interests reflect need for common good with shared interests.
The incoming Biden administration, which is likely to bring stability to America’s relationships abroad will find a different Asia. Countries especially in east Asia, having taken a lot of initiatives, feel they can shape their own future, said Professor Chan Heng Chee, Singapore’s former ambassador to the US.
The US has tremendous potential to contribute to common good of the Asian region. It will be beneficial for all if the US joins the global consensus without being paralysed by the American rivalry with China and become a partner in the peaceful rise of Asia -Pacific during the twenty-first and beyond.
Sajjad Ashraf served as an adjunct professor at the Lee Kuan Yew School of Public Policy, National University of Singapore from 2009 to 2017. He was Pakistan’s high Commissioner to Singapore from 2004 to 2008 and had also served Pakistan’s consul general in Dubai during mid 1990s.