That the Regional Comprehensive Economic Partnership agreement will take effect on Jan 1, 2022, is far more significant than just a multilateral free trade agreement (FTA) coming into force in a world haunted by growing protectionism, popularism and anti-globalization sentiment.
Peter Petri and Michael Plummer, two prominent economists, have said the RCEP will shape global economics and politics, and could add $209 billion a year to world incomes and $500 billion to world trade by 2030.
They have also said the RCEP and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership will make the economies of North and Southeast Asia more efficient by linking their strengths in technology, manufacturing, agriculture and natural resources.
Six of the 15 RCEP member states are also members of the CPTPP, while China and the Republic of Korea have applied to join it. The RCEP is one of the most important free trade agreements also because it is the first FTA that includes China, Japan and the ROK, which have been negotiating a trilateral FTA since 2012.
More important, the fact that China is part of the RCEP and has applied to join the CPTPP should be enough for those who doubt China’s vow to deepen reform and further open up to the rest of the world to change their mind.
China has been a major beneficiary of economic globalization and has become the largest trade partners of more than 120 countries. So why would it stop reform and opening-up, which are essential elements of globalization.
China’s success and its contribution to the global economy since its entry into the World Trade Organization in 2001 have been widely applauded by experts such as former US Trade Representative Charlene Barshefsky and former WTO director-general Pascal Lamy.
While covering China’s reform and opening-up from the late 1980s to the late 2000s, a catchphrase I used to hear was “adopting international practice”, learning from the United States, the European Union, Japan and other economies which joined the WTO earlier.
That’s why it’s shocking to see the US, which lectured China on globalization and FTAs for years, oppose FTAs and multilateralism and violate even the basic norms of globalization.
Previous US president Donald Trump pulled the US out of the Trans-Pacific Partnership agreement in 2017, prompting the remaining signatories to the TPP to revive it as the CPTPP. And, surprisingly, incumbent President Joe Biden has not talked about any FTAs due to strong opposition at home, especially from the trade unions that support his Democratic Party.
In an article in The Wall Street Journal on Wednesday, Ed Gresser, a former senior policy official of the US Trade Representative Office who has served the Barack Obama, Trump and Biden administrations, said Biden’s pursuit of a so-called worker-centric trade policy comes at the expense of establishing the US’ global leadership on trade, and Adam Posen, president of the Peterson Institute for International Economics, described Biden’s trade policy as protecting traditional manufacturing workers while raising the costs of imported goods for US businesses and consumers.
Biden has already disappointed many in the US and the world by failing to lift Section 232 tariffs on steel and aluminum, and halt the trade war with China, both of which were launched by Trump.
Michael Spence, a Nobel Prize winner in economics, said in a Project Syndicate article on Wednesday that, although Biden and President Xi Jinping recently agreed to carve out space for cooperation on climate change and the energy transition, the US has doubled down on strategic competition.
Spence also said that “we are still a long way from enjoying the free flow of technology needed to reduce global emissions to net-zero by mid-century”, referring to the urgent need for US-China cooperation in a wide range of areas.
Unfortunately, the US has been doing exactly the opposite of what it had preached for decades. It’s time for the rest of the world to enlighten Washington about the benefits of FTAs and globalization as compared with the zero-sum trade war and a new Cold War which it seems to be obsessed with.
The author is chief of China Daily EU Bureau based in Brussels.