More on the RCEP ~ and why Canada should act, soon

There is a very useful article in Foreign Affairs that provides a bit of a primer on the world’s post-TPP options. It is headlined: “A New Deal in Asia – Can RCEP Pick Up Where the TPP Left Off?

s-l300I have suggested before that the RCEP (East Asian Regional Comprehensive Economic Partnership) is the most suitable forum for Canada to seek to join, now that the Trans Pacific Partnership has been abandoned by US President Donald Trump in his foolishly, misguided quest to “make America great, again” by abandoning free(er) trade. He’s a stupid man pursuing a hopeless dream in a silly, even vengeful manner. But, he’s also got his tiny little paws on the levers of American power and he can (and likely will) bring real economic harm to a great trading nation … by which I mean Canada!

Canada needs to start working now, with Australia, China and India, especially, to make room for us in the RCEP.

Shiro Armstrong, an Australian academic and Asian trade expert, says, in the (linked, above)  Foreign Affairs article, that “Currently, there is nothing stopping Asian TPP countries from taking good policies from the [TPP] agreement, such as the market-access commitments on trade, investment, and services, and implementing them unilaterally. But without the guarantee of reciprocity, such actions would likely be politically unpopular. A more practical solution would be for ex-TPP countries to pursue plurilateral trade deals (or deals involving several participants) with one another. For example, the TPP’s proposed rules on e-commerce, which secure cross-border data movement and storage, made progress in setting new international standards. The TPP also included sensible provisions on anti-corruption and regulatory transparency. Even without the full agreement, countries could sign plurilateral deals enacting these standards and then have them ratified within the WTO. The deals could be left open for other countries to sign onto at a later time … [but] … The most promising opportunity to strengthen Asia’s rules-based economic order, however, may well be the East Asian Regional Comprehensive Economic Partnership (RCEP), a free-trade agreement currently under negotiation among Australia, China, India, Japan, New Zealand, South Korea, and the ten members of the Association of South East Asian Nations (ASEAN) … [because, Dr Armstrong explains] … Like the TPP, RCEP covers market access (in goods, investment, and services), rules, and trade facilitation. Yet RCEP differs from the TPP in being built around a cooperation agenda, in which the developed countries are expected to help the less developed ones through capacity building and the harmonization of standards, rules, and regulations. Of course, without a dominant country such as the United States to lead the negotiations and exert leverage, it may be that RCEP’s commitments will end up being less ambitious. But TPP has set some sensible benchmarks.

A good enough trade deal, even one with “less ambitious” commitments may be just what Canada needs …


… what Confucius meant was that waiting for the “perfect” deal in which every last i is dotted and t crossed may mean that we never get a workable trade deal with Asia.

Thanks to Beijing’s economic weight in the region and its political influence among 161118053613-cnnmoney-trump-trade-tpp-super-teasethe partnership’s other countries,” Prof Armstrong says, “RCEP has often been described, including by former U.S. President Barack Obama, as a China-led agreement. Yet as with other East Asian efforts at regional cooperation, such as the ASEAN Plus Three (China, Japan, and South Korea) dialogues on economic institution building, the real driver behind RCEP is not China but ASEAN. The proposed agreement is built on already existing free trade agreements between ASEAN and the six other RCEP parties, and negotiations were formally launched in 2012 at the ASEAN Summit in Cambodia. The structure of negotiations, for instance, means that China cannot dominate, or even show leadership except by way of example. Indonesia, where RCEP’s guiding principles were crafted, is the chair of the lead negotiating committee, and every alternate negotiating round is held in an ASEAN country. Driven to unity and cooperation in dealing with its large neighbors, ASEAN favors slow, consensus-driven cooperation. Rivalry and political mistrust among Asia’s major powers—China, India, and Japan—have made ASEAN the lynchpin of regional dealmaking.” But, RCEP, as Shiro Armstrong explains, is not without flaws, some of which will make it hard to “sell” to many Canadians. While, he says, “RCEP provides a natural opportunity for building an Asian coalition in defense of free trade and economic cooperation, and one that could potentially incorporate certain aspects of the TPP, such as the latter’s rules on e-commerce and investor protections,” he adds that “Not all of the rules and standards in TPP can or should be incorporated into RCEP, however. The TPP’s rules on strengthened intellectual property rights, and on higher labor and environmental standards, for example, reflected the expectations of an advanced economy and had largely been imposed by the United States. RCEP members such as China, India, and the developing economies of Southeast Asia may aspire to U.S. standards on labor and the environment, but they can not meet them immediately or leapfrog into advanced stages of development.” We can imagine that the Canadian Labour Congress and its allies and the “greens” of various political stripes will not be happy with a RCEP that doesn’t have strong (maybe impossible for some Asians to accept) “intellectual property rights …[and] … higher labor and environmental standards,” as the TPP did.

123As I have often said, any trade deal is just that: a “deal,” first and foremost, and in almost all deals one gives something in order to get something in return. We may have to “give” on e.g. labour and environmental standards to accommodate e.g. Indonesia or the Philippines in order to “get” better, free(er) access to Asia’s HUGE markets. Look at the graphic: the RCEP embraces every really important country except Hong Kong, Taiwan and the USA. It is bigger than the CETA and, potentially, just as important, for Canada, as NAFTA.

For Canada, now, the ball is in the court of our Foreign Minister, Chrystia Freeland, and Trade Minister, François-Philippe Champagne …

… as are several other balls, especially NAFTA renegotiations with a tough and generally hostile US trade team being “guided,” if that’s the right word, by Donald Trump.

Professor Armstrong concludes his article by saying that “This year marks the 50th anniversary of the formation of ASEAN, which could provide negotiations with a sense of urgency. The core of a credible RCEP can be completed in 2017, with the landing zones for the rest of the agreement cleared for completion in 2018. But doing so would require political leadership in countries that have so far shown little evidence of it. But this is no ordinary time in the global economic system. The rise of protectionism and nationalism around the world is driving home the point that business as usual for Asia will no longer suffice.” He’s right about “business a usual” not being sufficient for Asia or for Canada. We need, more than ever before, to expand and diversify our trade ~ to be less AAEAAQAAAAAAAAlUAAAAJDFmZTVhMzA2LWUwYjAtNGU5NC1iMjFiLTBjZjc2OWI4ODY2Ngand less dependent on an erratic and unreliable US partner and to be, concomitantly, more open to others. We need to complete CETA, to renegotiate slide1NAFTA, to work on either a bilateral trade deal with the UK or, better, as Erin O’Toole suggests, to negotiate a four way trade deal within the CANZUK nations. There needs to be room on the agenda for Asia, too, and it seems to me that the RCEP is the best way “into” free(er) trade with Asia and, therefore, to securing one of Canada’s vital, strategic interests.

And after Asia we need to turn our attention to Africa.

5 thoughts on “More on the RCEP ~ and why Canada should act, soon

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