RCEP Agreement: First China Challenge for Joe Biden

With the conclusion of the world’s largest trade agreement, 15 countries in the Asia-Pacific region, including China, are opening a new chapter of economic integration in a region ready to come out of the COVID-19 pandemic.

Donald Trump has yet to acknowledge his electoral defeat, but on the world stage, the wheel is spinning and it’s going in the opposite direction of the dynamic he meant to set in motion. The momentous free trade agreement signed on Sunday, Nov. 15, by 15 countries in the Asia-Pacific region, including China, is a perfect counterpoint to another regional agreement, the Trans-Pacific Partnership, from which the United States withdrew as soon as Trump arrived at the White House in January 2017.

Beijing hailed this new agreement, named the Regional Comprehensive Economic Partnership, as a “victory of multilateralism and free trade.” The newspaper tasked with transcribing the Chinese leadership’s official word to the outside world, Global Times, published a host of articles on the inescapable embarrassment of the U.S., entangled in its “unilateralism.” While denying they view the RCEP as a dig at the U.S., these comments clearly reflect Beijing’s satisfaction about this step forward towards greater regional economic integration in Asia.

It is indeed a step forward. With 15 signatories — including 10 member states of the Association of Southeast Asian Nations plus China, Japan, South Korea, Australia and New Zealand — the agreement covers about one-third of the world’s population and one-third of the world’s production. It makes this Asia free-trade zone the largest in the world, comparable in size to the North America or European Union free trade zones. It is remarkable for one other reason: This is the first trade agreement bringing together the region’s three economic heavyweights: China, Japan and South Korea.

Will China Want To Take the Helm?

The result of eight years of negotiations, the RCEP, however, is not a Chinese initiative. ASEAN was its initiator, concerned as it was with opening up the very different and unevenly powerful economies of its 10 member states (Vietnam, Singapore, Malaysia, Indonesia, Myanmar, Laos, Brunei, Cambodia, Philippines, Thailand) to the rest of the Asia-Pacific region. Less ambitious than the original TPP project from the U.S., it doesn’t cover agriculture and only partially includes services. Nor does it include the region’s other heavyweight, India, which withdrew from negotiations in November 2019.

But the larger question hanging over the future of this free trade agreement, which has yet to be ratified by each country, is what role China will want to play. Will it allow ASEAN to follow its original objectives, or will it take over a trade area that won’t be hard to dominate with all its weight? This is precisely the reason why New Delhi changed its mind.

Signed in February 2016 at the end of the Obama administration, the TPP was initiated by the U.S. and aimed at integrating the economies of North America and the Asia-Pacific region, but excluded China. Following the pullout of the U.S., it became the “Comprehensive and Progressive Agreement for Trans-Pacific Partnership,” settled in 2018 by 11 countries, seven of which are also signatories of the new agreement, including Australia and Japan.

This new chapter in world trade is a first challenge for the future Biden administration. It also minimizes the ambitions of the Indo-Pacific strategy devised by the U.S., Japan, India and Australia, and supported by France and Germany, to counter Chinese expansionism.