Largest free trade area in the world: Asia overtakes the USA – and Trump is playing golf

Largest free trade area in the world: Asia overtakes the USA – and Trump is playing golf

From Max Borowski

The content of the new Asia-Pacific trade deal RCEP is formally unspectacular. But it marks a further step in the global shift in power. The US and Europe not only give up trade shares, but also their influence on environmental protection and human rights.

The symbolism could hardly have been more drastic: US President Donald Trump regrets not being able to attend the virtual summit of the Southeast Asian community of states ASEAN and other countries in the Pacific region, assured the US President’s National Security Advisor, who represented him. At the same time, the US media published photos of what the elected president did important instead: playing golf in his own resort Mar-a-Lago in Florida. The 15 participating Asia-Pacific countries meanwhile signed an agreement for the largest free trade area in the world.

The Regional and Comprehensive Economic Partnership (RCEP) and the golfing US President show how the coordinates in the world trading system have shifted and will continue to shift. A gigantic trading area is emerging in Asia, comprising around a third of the world’s population and economic output. The two largest economic powers in the world to date, the USA and the EU, are not only not involved in this agreement. They also do not create a counterbalance through their own comparable trading deals. Trump has stopped both US participation in the Pacific trade agreement TPP – a pact intended to counterbalance China’s dominance in Asia, and free trade with Europe under the TTIP treaty. RCEP now shows how the integration of world trade is progressing despite protectionism in America or globalization skepticism in Europe – with China at the top.

The text of the treaty, which has been negotiated for years, contains little revolutionary. The participating states – in addition to the ASEAN members Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Myanmar, Cambodia, Laos and Vietnam, are also participating in China, Japan, Australia, New Zealand and South Korea – are already through bilateral trade agreements with ASEAN Alliance linked. The practical achievement of RCEP is that it harmonises these partly different contracts into one agreement. This is likely to be particularly noticeable in the companies involved in the reduction of bureaucracy. The agreed tariff reductions and the dismantling of other trade barriers, on the other hand, are not very ambitious compared to other agreements – initially.

No standards for the environment and human rights

But with RCEP a trade organization has emerged, within which more is already being made than in any other region in the world. RCEP will continue to accelerate trade growth in this Asia Pacific region. Europe and the USA are not only in danger of losing market share. Their power to set standards in world trade will decline, and China’s influence will continue to increase. What this means can be seen, among other things, from the fact that RCEP – in contrast to the agreements promoted by the USA and Europe in the past – does not oblige its members to any minimum standards of human rights, environmental protection or protection of intellectual property.

At the same time, RCEP also represents a concession to its neighbors by the increasingly powerful economic and political leadership in Beijing. While China has overwhelming preponderance in all bilateral relations with countries in the region, it by no means dominates the multilateral trade pact. Together, for example, the western-oriented contract partners Japan, South Korea and Australia are at least economically equal. From their point of view, after the United States failed as a partner, RCEP is an important step in limiting China’s rapid increase in power.

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Author: Killian Jones
Graduated From Princeton University.He has been at the USTV since 2017.
Function: Chief-Editor

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