Changing Dynamics of Asia-Pacific’s Geo-economics
Brigadier (Retd.) Dr. Ahsan ur Rahman Khan
A recent report, which somehow has not drawn much attention of media and public, is regarding formulation of Regional Comprehensive Economic Partnership (RCEP). In reality, though, it clearly reflects the highly significant emerging changes in the dynamics of Asia–Pacific’s geo–economics, which obviously has geopolitical connotations. These changes, when finally actualised, will clearly have the potential of tilting the balance of geo–political power in Asia– Pacific in favour of China.
Some of the aspects of RCEP mentioned in the report of New York US–based financial/business news website Market Watch of 15th of this month (November 2020) are (1):-
- “China and 14 other countries agreed Sunday to set up the world’s largest trading bloc, encompassing nearly a third of all economic activity, in a deal many in Asia are hoping will help hasten a recovery from the shocks of the pandemic. The Regional Comprehensive Economic Partnership, or RCEP, was signed virtually on Sunday on the sidelines of the annual summit of the 10–nation Association of Southeast Asian Nations”.
- This RCEP includes the Association of Southeast Asian Nations (ASEAN)’s member countries (Cambodia, Indonesia, Laos, Myanmar, Philippines, Thailand, Brunei, Singapore, Malaysia and Vietnam) and the non–ASEAN countries (China, Japan, South Korea, Australia and New Zealand).
- “The RCEP agreement is loose enough to stretch to fit the disparate needs of member countries as diverse as Myanmar, Singapore, Vietnam and Australia. Unlike the CPTPP and EU, it does not establish unified standards on labor and the environment or commit countries to open services and other vulnerable areas of their economies”.
BBC’s report of 16 November 2020 also highlights the fact that RCEP is not a ‘quick fix’ arrangement engineered by China; rather, its formulation is the result of prolonged deliberations of the concerned countries. In that context, the report highlights, “Negotiations over the new RCEP deal began in 2012 and it was finally signed on Sunday on the sidelines of a meeting of the Association of Southeast Asian Nations (Asean)”. About the significance of RCEP in relation to China, this report asserts, “The pact is seen as an extension of China’s influence in the region”. It also explains,” The RCEP isn’t as comprehensive and doesn’t cut tariffs as deeply as the TPP’s successor. But many analysts think RCEP’s sheer size makes it more significant”; and that, “The new free trade bloc will be bigger than both the US-Mexico-Canada Agreement and the European Union”. Additionally, about the enhancement of intra–RCEP imports and exports, this report also expresses the probability that “Under RCEP, parts from any member nation would be treated equally, which might give companies in RCEP countries an incentive to look within the trade region for suppliers”. (2)
Another much noteworthy fact is that formulation of RCEP has not drawn any adverse comments from Europe, despite US’ geopolitical influence on most of the European countries; rather comments from European press are quite favourable – some examples (3):-
- The publication of euro topics European Press Roundup has mentioned (italics added for highlighting), “The Regional Comprehensive Economic Partnership (RCEP) comprises around a third of global economic output. Close allies of the US such as Australia, Japan and South Korea will also participate in the agreement initiated by China. The press examines how much of a breakthrough the agreement really is and how Europe might benefit”.
- Hamburg (Germany)–based DE instead of any criticism of China’s lead role in RCEP, highlights the fault of US’ policy by asserting (italics added for highlighting), “The US wanted a TPP without China, but with common standards in areas such as environmental protection and workers’ rights. But Trump, the protectionist and despiser of multilateralism, pulled out of the TPP process right at the start of his term in office. All those moaning about China’s growing influence can thank Donald Trump. He tried to limit China’s economic power – and in doing so achieved exactly the opposite”.
- About RCEP being beneficial for Europe, and the rising geo–economic significance of China, the Dutch (Netherlands) daily newspaper DE VOLKSSKRANT asserts (italics added for highlighting), “An enormous free trade zone in Asia could be beneficial for European companies. The EU can conclude a new trade agreement with the RCEP, as it did in the past with South American Mercosur. And the RCEP, a fruit of Asian pragmatism, also seems to strengthen the multilateralism in which the EU thrives. The symbolism of the founding of the RCEP in the middle of the global coronavirus pandemic and on the eve of Biden’s presidency should not be underestimated. With RCEP, China is positioning itself as the world champion in the fight against Trumpist protectionism.”
It is obvious that complete implementation of RCEP and full actualisation of its economic benefits to member countries will take some time, but accrual of those economic benefits are certain. And about the significant geo–economic and hence geopolitical connotations of RCEP, the remark of the 15th November publication of Oceanwide Logistics Global network appears to be aptly coining, i.e. “US Commerce Secretary Wilbur Ross has called it a “very low grade treaty” that lacks the scope of TPP. But RECP’s imminent implementation illustrates America’s diminishing clout and could make it harder for US business to compete in the vast region”. (4)