Global Economic Blocks

By pjain      Published June 14, 2021, 11:17 p.m. in blog Geo-Politics   

RCEP $28T GDP, 2.3b Population

What is RCEP - Takeover of 10 nation ASEAN

It basically superclasses 10 members of the Association of Southeast Asian Nations (ASEAN) and five other regional partners (China, S.Korea, Japan, ..)

A free trade agreement to come into effect 2022 after it is ratified by 60% of countries between 15 Asia-Pacific nations centered by China.

Country GDP $B Population m
China 14,700 1,404
Japan 5,000 126
S. Korea 1,600 52
Australia 1,400 26
Indonesia 1,100 270
Thailand 502 70
Philippines 362 109
Vietnam 341 97
Singapore 340 6
Malaysia 338 33
NZ 209 5
Myanmar 81 53
Cambodia 26 16
Brunei 12 0.5
Laos 19 7.3
  • Data as of 2020

Key Trade Benefits, Competition, and Implications

Members will see lowered or eliminated tariffs on imported goods and services in 20 years.

Brookings simulations estimate the potential gains from the RCEP are: $209 billion could be added annually to world incomes, and $500 billion may be added to world trade by 2030.

Also, the RCEP and CPTPP will offset any decrease in trade from the U.S.-China trade war.

Southeast Asia (10 ASEAN partners) will benefit significantly from RCEP ($19 billion annually by 2030) but less so than Northeast Asia (S.Korea, Japan, China) because they already had free trade agreements with RCEP partners.

Supply Chain Integration and Efficiency

The new agreements will make the economies of North and Southeast Asia more efficient, linking their strengths in technology, manufacturing, agriculture, and natural resources.

It incentivizes supply chains across the region. but also caters to political sensitivities.

Will help China increase its Economic Outlets and Dominance

RCEP could improve access to Chinese Belt and Road Initiative (BRI) funds, enhancing gains from market access by strengthening transport, energy, and communications links.

FDI rules on investment

Lame Rules of Origin - Chinese Wolf in Sheep Coat

RCEP’s favorable rules of origin will also attract foreign investment.

Politically Lame - No Intellectual and Telecom Controls

Its intellectual property rules add little to what many members have in place.

IP Rules?

Support Cross-Border E-Commerce

Telecommunications rules - Still restrictions on Chinese firms

No Goodie Climate, Politically Safe

The agreement says nothing at all about labor, the environment, or state-owned enterprises — all key chapters in the CPTPP.

No Labor Union provisions like USMCA, State Owned

No Environmental Protections

No change in Any Government Subsidies

Compensate for US-China Trade War

The RCEP and CPTPP will offset any decrease in trade from the U.S.-China trade war.

Trilateral China-South Korea-Japan free trade agreement 2022

While it has been stuck for many years, the trilateral China-South Korea-Japan free trade agreement will become active as soon as they are able to conclude the negotiation on RCEP.

CPTPP, 2018

Comprehensive and Progressive Agreement for Trans-Pacific Partnership

Japan itself was not supportive of the TPP at the outset due to strong domestic objection, especially by agricultural organizations that feared the treaty would increase unemployment and destroy Japanese agriculture. However, later The Japanese government took the lead in finalizing the CPTPP after the Trump administration withdrew from the multilateral free trade agreement in January 2017.

The remaining countries regrouped to form the TPP-11 or the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free-trade agreement between 11 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, and Vietnam. The CPTPP entered into effect in December 2018.

India and the United States were to be members of RCEP and the CPTPP, respectively, but withdrew under the Modi and Trump governments.

  • Numbers above are 2018 GDP in trillions of U.S. dollars

Older estimates the TPP would increase workers’ wages in all signatory countries, and that the treaty would add 128,000 full-time jobs in the United States. Moreover, since 95 percent of prospective customers of the United States live overseas, it has been estimated that the TPP would have “increased U.S. exports by $357 billion per year and added 0.5 percent to GDP.”

However Biden is not all in “knows TPP wasn’t perfect and believes we need to make it stronger and better. ... the priority of the Biden administration “is on doing everything we can to advance working families and the American middle class.” - White House.

Indeed, given the domestic constraints, especially persistent opposition to economic globalization in the Rust Belt area, and with an eye to the 2022 mid-term election, it is regarded as premature for the Biden administration to rejoin the current TPP framework at this stage.

Bilateral and Free Trade, MFT Agreements

US Policy

2021 Biden Rejoins and Reengages

2018-2020 Trump Era

Biden’s first steps in reversing Trump’s foreign policy moves, which CFR President Richard N. Haass defined as the “Withdrawal Doctrine” after Trump pulled out of the Paris Agreement on climate change, cut WHO, the Iran nuclear agreement, and many other pacts and institutions. As part of that Trump blocked TPP ratification.

"The major question is how much damage has been done to the credibility of U.S. leadership, especially in that the United States has shown that its policy can turn on a dime when administrations change,” --- Stewart M. Patrick, CFR

Free and Open Indo-Pacific (FOIP) - political and not-economics based!

US approach risks sidelining the United States while economic arrangements like RCEP, CPTPP, and BRI continue to grow.

As experts have noted, the principles of FOIP — an open, inclusive, peaceful region — were consistent with established U.S. policy favoring globalization, financialization, US MNCs, US Softpower promotion and "democratic" boosts.

The U.S. approach antagonized ASEAN and other East Asian friends, forcing countries into unnecessary and risky political choices.

Quad and Isolating China, Russia, N.Korea, Iran - US Policy

But the administration’s tactics then emphasized isolating China from regional economic networks and prioritized security arrangements centered on the Quad (Australia, India, Japan, and the United States).

2021 Biden Rejoins and Reengages the World

  1. Paris Agreement in first day in office Biden signed a letter to reenter the United States into the Paris Agreement, the most significant global climate pact to date, which requires nearly all countries to set emissions-reduction pledges, though commitments are not legally binding. Reentering the agreement requires only one month’s notice, so the United States will be back in by March'20. Biden has released an ambitious climate plan, pledging to work toward achieving net-zero emissions in the United States by 2050, and some of his proposed actions would require congressional approval.

  2. WHO. n day one, Biden rejoined the World Health Organization (WHO), a UN agency that coordinates international health efforts. Trump announced his intention to withdraw the United States from and cut funding to the WHO, limiting U.S. engagement with the body over its failure to reduce Chinese influence. (The withdrawal wouldn’t have taken effect until July 2020.) US will also join COVAX, a WHO-led initiative to distribute two billion COVID-19 vaccine doses around the world by the end of the year.

  3. JCPOA renegotiating. After exiting the JCPOA in 2018, the Trump administration ratcheted up sanctions on Iran. Tehran responded by exceeding limitations on its nuclear program set under the agreement. Biden has said that he will reenter the deal if Iran returns to compliance, which Iranian officials have indicated they’re willing to do. However the EU is leading this and US-Iran are not talking directly.

  4. UN Human Rights Council. Biden said during his campaign that he would rejoin the UN Human Rights Council, a body the Trump administration pulled out of due to alleged anti-Israel bias and a membership that included human rights abusers, such as China and Venezuela. The United States is not eligible to run for a position on the council until later this year, so Biden will likely use the next few months to build the case that it is worth rejoining

  5. TPP - Japan wants US to rejoin.

  6. Obama had been a key driver
  7. Trump Pulled out immediately on taking office
  8. Biden maj rejoin

US MCA (former NAFTA) $23.7T GDP, 496m Population

EU $15T GDP, 445m Population

US Reengages with ECB, Nato and EU Policy

China-EU investment treaty

President Xi Jinping promised in 2020 after success on RCEP to speed up negotiations on a China-EU investment treaty and a China-Japan-ROK [South Korea] free trade agreement.”

China-BRI penetration


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