CPTPP, RCEP can build cooperative partnership

By Bi Jing Source:Global Times Published: 2017/12/20 0:28:39

Illustration: Peter C. Espina/GT

It has seemed since the Trans-Pacific Partnership (TPP) was rebranded as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in November that the CPTPP has had an ambition to take on the Regional Comprehensive Economic Partnership (RCEP). Japan - the largest member economy of the CPTPP, which doesn't include China - apparently has high expectations for this trade pact.

The CPTPP may have shrunk in scope following the withdrawal of the US from the TPP, but it is certainly based on the original intent, and now reflects the interests of the remaining member countries more precisely. Although it might still be a while before the CPTPP enters into force, it signifies the unchanged yearning of most of its member countries for free and fair trade as well as a desire to respond against trade protectionism.

The RCEP, dominated by the Association of Southeast Asian Nations (ASEAN), is the largest regional trade pact in the Asia-Pacific region with the participation of China. Since the RCEP negotiations started in 2012, 20 round of talks on the agreement have been held thus far. Initially it saw only tepid progress, but it has become a much-talked-about deal. To be fair, this was partly fueled by the signing of the TPP in early 2016. RCEP member countries reportedly aim to bring the negotiations to a conclusion in 2018.

The CPTPP is now composed of 11 member nations, accounting for 14 percent of world GDP, 7 percent of the global population and 15 percent of global trade, while the 16-member RCEP accounts for roughly 50 percent of the world's population, 32 percent of global GDP and 29 percent of global trade. But the two free trade blocs follow different approaches. The CPTPP maintains the TPP's high standards and the agreement, once reached, won't be easily changed, making it difficult for new members to join the grouping. The RCEP, for its part, holds lower standards than the CPTPP in terms of guarantees regarding various aspects of trade, but it is more tolerant and flexible, with the goal of gradually raising standards as more new members join the pact. Given the strategic intention of the US-led TPP and the strategic moves of Japan, which holds a dominant position in the CPTPP, some believe there will be increasing competition between the CPTPP and the RCEP. But I don't believe this will necessarily be the case.

First, there's a big chance that the RCEP will be signed next year. More than five years since its inception, the RCEP has made fairly solid progress. Compared with the upgraded version of the China-ASEAN Free Trade Area, the RCEP framework pact agrees on the addition of new chapters of intellectual property and government procurement and also has separate chapters on financial services, telecom services, e-commerce, small and medium-sized enterprises, and economic and technological cooperation, which is already quite close to the TPP text. Currently, the 16 RCEP participating countries are holding deep discussions on issues concerning market access and rules and cooperation, among others. The talks are drawing to an end. Admittedly, there remain barriers to overcome when it comes to the huge differences between the participating countries and key disputes surrounding the negotiations. Nevertheless, considering that RCEP talks still have room for improvement, it is highly likely that a preliminary agreement text will be reached first in order to help conclude the negotiations at the earliest possible time. 

Second, the push for the CPTPP shouldn't be underestimated. The TPP was in the limelight due to its former leader, the US. Although it unraveled as US President Donald Trump withdrew the US from the trade pact, the high standards of the agreement haven't dropped out of sight. Its remaining members have also spared no effort to push for the implementation of the deal and the TPP was already signed in 2016, which means the CPTPP can surely avoid any detours. If all goes well, signing the CPTPP will happen fairly soon. Its participating countries, especially Japan, will certainly ramp up efforts to complete the CPTPP talks.

In fact, both the CPTPP and the RCEP highlight market openness in the wider region. They are different approaches to the same runway of globalization. Meanwhile, it should also be noted that there's an overlapping membership in the two groupings, with seven countries including Japan and Singapore participating in both agreements. The seven countries comprise developed states and developing economies, an indication that the game of globalization is unavoidable and will not be halted simply because of the exit of the US. Talks on the two trade blocs, it is believed, will go ahead without getting in each other's way, and there will be a win-win outcome rather than a zero-sum game. As long as the agreements are conducive to the member nations' national interests, and help in fostering trade openness and economic growth in the Asia-Pacific region, it is likely that the two trade deals could even be integrated to take the regional economic integration one step further toward the Free Trade Area of the Asia-Pacific.

The author is an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation. bizopinion@globaltimes.com.cn

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