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The RCEP’s full form, The Regional Comprehensive Economic Partnership or RCEP, was established in November 2012 as an ASEAN (external link) project.
The Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) between the ASEAN countries of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, as well as the six states with which ASEAN has free trade agreements (Australia, Japan, China, India, South Korea, and New Zealand).
The RCEP is a viable alternative to the Trans-Pacific Partnership, another key multinational deal (TPP). The TPP deal excludes two major Asian powers: China and India.
RCEP Benefits
The 15 participating countries have a total area of 22.54 million km2 and a population of around 2.29 billion people.RCEP member countries have a collective GDP of $29.7trillionUSD, which makes up almost 30%of the world GDP.
On January 23, 2017, US President Donald Trump issued a memorandum withdrawing the US from the TPP, shifting the world’s attention to RCEP.
RCEP aims to address trade-in products, services, investment, economic and technical cooperation, intellectual property, dispute resolution, and other topics.
The Trans-Pacific Partnership (TPP)
TPP’s origins can be traced back to the 1990s. Chile and New Zealand undertook two rounds of negotiations to establish a free trade agreement (FTA) in the early 1990s, but they ultimately chose not to pursue it. Meanwhile, New Zealand and Singapore negotiated an FTA in 2000, sparking the concept of a “P3” grouping (New Zealand, Singapore, and Chile) that was publicly discussed at the Asia-Pacific Economic Cooperation (APEC) Leaders Meeting in Brunei Darussalam in 2000.
The Importance of the RCEP for India
The RCEP allows India’s Act East policy to succeed and influence India’s economic standing among other South Asian countries.
In addition, compared to the TPP and TTIP nations, India’s trade with the RCEP group of countries has climbed as a percentage of total trade during the last decade. This demonstrates the significance of the RCEP to India.
Even though India had been a member of the RCEP drafting committee since its inception in 2011, it later opted to withdraw in November 2019. India stated that the committee did not address some of its primary concerns.
Agenda Control and Membership of RCEP
There is an agreement between the People’s Republic of China and Japan over membership and agenda control.
In terms of membership and agenda, the PRC and Japan have opposing views on the most appropriate regional economic architecture. The rivalry for regional domination stretches back to just after the Asian financial crisis of 1997/98. The Japanese wanted to form the Asian Monetary Fund (AMF), but the United States effectively vetoed it. The PRC was cautious about the Japanese proposal because it felt that the development of AMF would cement Japan’s hegemonic role in the area.
Future RCEP participation
It is unclear whether any accession rule will be used in the final RCEP document. While the guiding principles and objectives of RCEP specify that it would include an accession clause, it is unrealistic to expect RCEP to adhere to open accession standards. As previously stated, participation in ongoing RCEP negotiations is very restrictive; until economies have an FTA with ASEAN, they are not permitted to join.
Asian countries must know the economic risks associated with extensive trade liberalisation. The worldwide flow of products, services, and production elements is increasing due to ongoing global facilitation efforts. As a result, there’s a chance that economic activity will concentrate in a few “core” markets that are large enough to kickstart major growth and then take the lead in expanded development, resulting in even more growth. These core markets earn a larger part of global economic activity through trade diversion, investment accumulation, and subsequent industry relocation. Furthermore, the market potential of these countries offers them an advantage in trade discussions, particularly bilateral ones.
Conclusion
It appears appropriate to consider regionalism as a project driven by an economy seeking exclusive influence. TCEP and RCEP are not exceptions. The US and the PRC intend to exclude each other from TPP and RCEP, respectively, to set a convenient agenda. As a result, exaggerating the openness of these proposed agreements is incorrect. Participation in ongoing TPP negotiations is also difficult; it is contingent on earlier bilateral agreements with incumbents and their permission. Latecomers must also accept adverse negotiation procedures and bear negative requests made by incumbents.
The much more likely future scenario is for TPP and RCEP to coexist. For two reasons, neither can dominate the other. First, neither the US nor the PRC is willing to forego the opportunity to tame latecomers through accession, even though RCEP is expected to treat latecomer developing nations better than TPP. Developing countries uneasy with either agreement’s socialisation process are unlikely to apply for membership. This is especially true for TPP, a US tool for containing latecomers. Second, the country whose proposal receives less support than the other is more likely to behave benevolently to gain greater support.
