RCEP Photo: IC

 China and 14 other Asia-Pacific nations, including 10 ASEAN member countries and Japan, South Korea, Australia and New Zealand, are set to sign the Regional Comprehensive Economic Partnership (RCEP) agreement on Sunday. The signatories of the pact, however, do not include the US which has been traditionally regarded as a dominate player in the Asia-Pacific region. 

The conclusion of the RCEP indicates that the majority of Asian countries endorse an Asia-wide regional free trade framework that works to benefit all Asian economies and see it as a landmark step toward achieving closer economic integration in East and Southeast Asia. 

The RCEP sends out the message that Asian countries do not want to choose sides between the US and China. 

More significantly, they are not willing to blindly follow the US and exclude China, the biggest and most vibrant Asian economy, from the region's integration process.  A sound and healthy economic community in Asia cannot be achieved without China's participation. Of course, the concept of open regionalism embraced by China also welcomes America's participation in this cause.

RCEP's rise was initially an ASEAN response to the Trans-Pacific Partnership (TPP), a mega free trade agreement dominated by the US since it joined the negotiations in 2008. TPP membership included some Asian countries, but excluded many others. Most significantly, it excluded China, the world's second-largest economy and the largest trading partner of almost all Asian economies. 

The TPP was also an alarm to ASEAN because, before the TPP, Asian economic integration was driven and led by ASEAN, the largest regional organization in Asia. The TPP would divide Asia, slow down Asia's own economic integration process, and marginalize ASEAN. 

Against that backdrop, Asian economies launched RECP negotiations in 2012, under the leadership of ASEAN and with the enthusiastic support from China and other Asian economies. To some extent, RCEP reflects Asian countries' will to take the matter of regional economic integration in their own hands. Though they all welcome US input in the process, they are not inclined to see TPP-centric encirclement of China.

The RCEP and TPP do not necessarily compete with each other. Instead, they represent different levels of economic openness and liberalisation. The TPP, now effectively the CPTPP, represents "deep integration" and high-degree of liberalization. However, the RCEP takes into consideration the diverse stages of economic development of various Asian countries and aims to cater to countries' individual needs and concerns while still significantly promoting economic integration and liberalization. 

The Trump administration's withdrawal from the TPP in 2016 resulted in America's detachment from the process of Asia's economic integration. The move, representing a Donald Trump-style economic nationalism and isolationism, was quickly followed by the Indo-Pacific strategy, a pro-active geopolitical initiative aimed at establishing a "united front" in the form of an alliance or quasi-alliance to contain China's rise. 

During the same period, Asian economic integration moved steadfastly and will soon see the fruit in the form of the RCEP. In this sense, the RCEP represents the failure of the Trump administration's attempted encirclement of China in western Pacific.

The Trump administration's jettisoning of the TPP and promotion of "America First" unilateralism have raised doubts among Asian countries about US willingness to trade with the region on mutually beneficial basis.

It is, however, highly likely that the Biden administration will change the Trump course and be more engaging in dealing with Asia on the economic front. In this sense, the successful conclusion of the RCEP might raise the alarm to a new and different US government. One should not take it as a surprise if the new Joe Biden presidency uses the RCEP to hype "China threat" in order to build consensus in the US to join the TPP again. 

Asia, in the spirit of open regionalism, welcomes more countries to join its regional integration project. If the US wishes to restart its TPP accession, the barriers it will face will not be in Asia, and may not even come from China. 

Even if Biden himself strongly hopes to resume the TPP membership, it might still take a long time for the US to reopen the process. The sentiment of economic nationalism in American society runs noticeably deep, and many Democrats, the political base of Biden, certainly are not the best friends of free trade. Candidate Hillary Clinton, when campaigning against Trump in 2016, vociferously objected to the TPP. It will be a painful process for Biden to develop a new narrative.

In an ideal world, trade as an economic phenomenon should run its own course based on each trading nation's comparative advantage, without the interference of politics. In the real world, global trading is always tainted by domestic affairs and geopolitics. 

In this new round of China-US economic competition, the next key issue to watch is the global supply chain. Although former President Barack Obama and Trump are very different leaders, their trade policies share one common goal. That is, the US government, be it controlled by the Republicans or Democrats, is expected to alter the China-centred global supply chain and bring the gravity of the global production networks back to the US and its allies. 

At least, they probably both wish to move China out of the central position in the global supply chain networks. The difference is Obama implemented it through the alliance-building effort of TPP while Trump resorted to tariffs war. Further, Obama might have been willing to allow China to join, provided China could meet the high standards contained therein. Trump's aggressive unilateralism, in contrast, was perceived in China as overwhelmingly a geopolitical strategy to contain China and impair its "right of development".

The US-China rivalry has however reached the stage where neither country can supress the other's development. At least from a trade perspective, a containment strategy undermines global welfare as well as damages both countries' economic interest. Unfortunately, this common sense has not been taken seriously by American policy elites.

In this context, we should not have the delusion that pre-Trump globalization will be fully resumed. Insofar as the production networks are concerned, what is more likely to happen is the parallel existence of two global supply chains in Asia and North America, with China and the US as the respective leading players. Of course, most countries, including notably the European economies, will participate in both supply chains.

The author is a professor of law at the City University in Hong Kong. opinion@globaltimes.com.cn