TPP or RCEP? A Competition for Asia-Pacific Economic Cooperation

Ding Rui

(Shanwei Institute of Technology,Shanwei 516600)

Abstract:The Asia-Pacific region has become home to a large and rapidly growing number of RTAs.Despite the large sum of regional and international trade,there’s been a fierce competition for the model of Asia-Pacific regional cooperation.Two models competing with each other are TPP (CPTPP) and RCEP.This essay is making an effort to uncover and analyze the region and the development of TPP and RCEP,and reveal the economic,social and political motivations behind the two models.From a geopolitical perspective,the competition of regional cooperation in Asia-Pacific is not only about the dominant economic power of the political forces in the region,but also reflects the profound reality of the differentiation and reorganization of power in the Asia-Pacific region in the era of globalization,and this probably is the single most important issue for the region,which happens to be the research significance of this paper.

Key words:Asia-Pacific region;TPP;RECP;Competition

International trade is the exchange of capital,goods,and services across international borders or territories.In most countries,such trade represents a significant share of GDP.While international trade has existed throughout history (for example the Silk Road,Amber Road,the Atlantic slave trade),its economical,social,and political significance has been on the rise in recent years.The current framework of the international trade is composed of three levels.The first is the global multilateral trade system represented by the World Trade Organization (WTO).The second is the regional or bilateral trade system represented by Regional Trade Agreements (RTAs).The third is the unilateral management system implemented by a government of a country for its own trade.

1 Introduction

The Asia-Pacific region is home to a large and rapidly growing number of RTAs.These agreements do not just come in quantity,but also in diversity as they differ from each other in design,scope and purpose.With that comes the spaghetti bowl①,which poses the potential risk that might result in investment and trade chaos.International organizations such as the WTO and regional organizations including APEC or ASEAN Economic Community(AEC) still have trouble finding solutions to resolve such issues(Capling and Ravenhill,2011).

Table 1 Existing RTAs in the Asia-Pacific Region

From Table 1,it can be seen that Asia-Pacific region (East Asia and Oceania) together counted roughly 100 RTAs by 2017,almost tied with Europe if not more.Faced with this intensifying chaos,the Trans-Pacific Partnership (TPP) agreement exhibits profound economical and political significance and it has the potential to point current RTAs in the Asia-Pacific to a new direction.

2 What is TPP？

The TPP refers to the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or P4),which is a free trade agreement signed by Brunei,Chile,New Zealand and Singapore in 2005.In September 2008,the US announced that it would join the TPSEP,which was rather unknown to the rest of the world at the time.Late in November,the US officially proposed to expand TPSEP and began to take over the negotiations.The TPSEP was renamed the TPP at the same time.Japan,Canada,and Mexico expressed their interests in joining the TPP in November 2011,Mexico and Canada joined the TPP the next year.Peru,Malaysia and Vietnam joined the agreement in the following years,making it 12 member countries in total.

Three reasons can account for the widespread concerns of Asia-Pacific countries for the US’ joining and leading the TPP.Firstly,its timing coincides with the acceleration of economic integration in East Asia and the implementation of the Asia-Pacific Re-balance strategy.Secondly,the agreement consists of major economies in East Asia,but China is excluded.Thirdly,the agreement is characterized by a comprehensive next-generation regional agreement②.

After WWII,Europe and Japan gradually raised as major economic powers,and the domination of the US was thus challenged.On the one hand,the US’ share of world goods exports has gradually shrunk,which has fallen from 21.7% in 1948 to 12.3% in 1973 (See Table 2).On the other hand,the US has undergone a huge trade deficit,and for the first time in 1971,the US had a trade deficit of$2 billion.Since then,in addition to the surplus of US$1 billion and US$9 billion in 1973 and 1975 respectively,the US has had a deficit trade since then,which is still on the rise.

Table 2 Proportion of Major Economies in World Goods Exports from 1948 to 2010

2.1 RTA model in Asia-Pacific before TPP

The 1997 Asian financial crisis made East Asian countries aware that the existing global and regional cooperation framework could not solve the practical problems in East Asia.As a result,the pace of East Asian cooperation has begun to accelerate.Among them,the East Asia Free Trade Area (EAFTA) and the Comprehensive Economic Partnership in East Asia (CEPEA) are the two most prominent ones.

In 2001,East Asia Vision Group (EAVG) presented the idea of building an EAFTA on the 5th Leaders Meeting of APT Summit.In 2004,the 8th Leaders Meeting of APT Summit endorsed the decision of the Conference of Economic Ministers on the establishment of an expert group to conduct a feasibility study on the establishment of EAFTA③.According to the 2006 Joint Expert Group on EAFTA Feasibility Study,EAFTA will eventually achieve substantial liberalization of goods and services,including sensitive sectors.Sensitive departments cannot be an exception to the agreement,but can be listed on a list and gradually open up in the shortest possible transition period.In addition,the agreement includes customs procedures,technical barriers to trade,rules of origin,labor mobility,investment,competition policy,intellectual property rights,government procurement,consultation and dispute resolution,economic cooperation and institutional framework for policy dialogue.The 2009 Joint Expert Group Phase II report recommended a progressive and pragmatic strategy to achieve high quality EAFTA.

Japan actively promoted the CEPEA concept which comprises Australia,New Zealand and India.The 2nd East Asia Summit in 2007 agreed to conduct a research on CEPEA.According to the report of the CEPEA study group,the three pillars that make up CEPEA are economic cooperation,facilitation and liberalization.Among them,economic cooperation covers cooperation fields including human resources development,statistics,technology transfer,infrastructure development,transportation infrastructure and logistics,environment and energy,rural development.Facilitation includes rules of origin,customs procedures,standards and conformity assessment procedures,implementation of facilitation measures,issues related to domestic regulations (eg,intellectual property,government procurement,investment protection,competition policy).Liberalization mainly refers to the removal of barriers to the free flow of goods and services.

The major difference between the two competing modes of EAFTA and CEPEA lies in members.The former consists of 10 ASEAN countries and China,Japan and Korea,namely,the10+3.While the latter covers Australia,New Zealand and India,namely 10+3+3 or 10+6.What they have in common is that they both excluded the US,a powerful country which exerts significant influence in East Asia.The trend of East Asia to bypass the US to build a trade order independently has become increasingly apparent.

2.2 TPP as a new trade model in Asian-Pacific

The emergence of the European Union (EU) is considered by many American politicians as a historical lesson for the US.It must not tolerate the emergence of an exclusive regional economic cooperation organization in East Asia.Therefore,the US has always been opposing the economic integration of East Asia.Before the 1990s,regional economic cooperation programs proposed by countries including Japan,Malaysia,and Australia all failed because of the opposition of the US.After the US joined APEC,it began to actively transform APEC into a new regional organization.In 1993,the first APEC summit held under the impetus of the US was held in Seattle,USA,and raised the imagination of free trade in the Asia-Pacific region.A more specific Bogor Declaration was presented at the second APEC summit in Bogor,Indonesia,in 1994.It set the goal of achieving free and open trade and investment in the Asia-Pacific region,and proposed a timetable for developed and developing members to respectively achieve this goal no later than 2010 and 2020.During the 1997 Asian financial crisis,APEC failed to play its due role.Asian countries were deeply disappointed by this,which led to the gradual marginalization of APEC.Since the beginning of the 21st century,the pace of economic integration in East Asia has sped up.The US faces the challenges from 10+3,10+6 and numerous bilateral FTAs and thus recognizes the intention to regain leadership in Asia-Pacific economic integration.However,the only framework in which the US can intervene and even lead economic cooperation in the Asia-Pacific region is APEC.Therefore,the US began supporting the FTAAP initiative under the APEC framework.

However,the huge differences in political,economic,cultural,and religious aspects among members in the Asia-Pacific region indicate that the cooperation institutionalization in the Asia-Pacific region will be a long-term process.10+3,10+6 and FTAAP are all only at the FTA level,and are unable to make substantial progress.In order to achieve new breakthroughs in regional cooperation in the Asia-Pacific region,the Bush administration announced in the final period of his administration that the US will join the TPP.At the time,US Trade Representative Susan Schwab clearly stated the potential of TPP as a platform for building a trade order in the Asia-Pacific region.Schwab stated that the US was particularly interested in this high-standard agreement,which can be used as a platform to promote trade,investment liberalization and integration for the Pacific region and beyond (Nair,2014).Although the Obama administration announced its comprehensive review of the Bush administration’s trade policy,the Obama administration has successfully inherited the political legacy of the Bush administration.This is because joining the TPSEPA helps to achieve the Obama Administration’s strategic goal of pivoting to the Asia-Pacific.Under the impetus of the US,the Yokohama Declaration of the 18th APEC Summit in 2010 clearly identified TPP as the path to achieve FTAAP,which is comparable to 10+3 and 10+6.

Due to the difficulty in forming a comprehensive free trade agreement in the short term,economies in the Asia-Pacific region have begun to adopt sub-regional and bilateral free trade cooperation models.According to APEC statistics,as of 2008,there were 41 RTAs signed between APEC members,of which 34 came into effect after 2000.

The open areas,open timetables,and rules of origin involved in these agreements are various.Therefore,the US is concerned that these semi-open,regionally-wide trade agreements with exceptions will lead to a multi-track of the regional trade order,which in turn will exacerbate the Spaghetti bowl of trade rules and increase transaction costs.The US hence believes that it is necessary to develop a model for the regional trade order.

The TPSEP was initiated in 2002 due to the delay in the FTAAP negotiations and the stalemate in the WTO Doha Round negotiations,the founding countries realized that it is futile to negotiate with APEC members who are unwilling to further open up in the near future.They believe that it is more feasible to reach an agreement by a small number of economies that are willing to liberalize in a wider range of areas.The negotiations on the TPSEP ended in 2005 and came into effect in 2006.

The TPSEP is considered a high standard and comprehensive regional trade agreement.For the trade of goods,Chile,New Zealand and Singapore gradually eliminated tariffs on all tax codes,and Brunei gradually eliminated the tariffs on 99% of its trade.The most prominent feature of the TPSEP is openness,which is different from the exclusivity of other RTAs.Provision 6 of Article 20 of the agreement (Lim,Elms and Low,2012) states that this agreement shall be open to any APEC member in accordance with the conditions agreed by the members.Its purpose is to encourage other APEC members to join and eventually form an FTAAP that includes 21 APEC members.The reason why the US chose to join the TPSEP and elevated it as a model for regional trade order is precisely because it contains almost all the new issues that meet the US goals and interests.

There are two ways for the US to build the regional trade order through TPP.Firstly,it can incorporate trade rules that it has been advocating but cannot implement by leading the TPP negotiation agenda.US Trade Representative Ron Kirk said the TPP reflects US priorities and values and will serve as a model for future US trade policy (Iapadre &Plummer,2011).From March 2010 to July 2012,13 rounds of negotiations had been held for TPP.The topics it covered include customs administration,policy transparency,technical barriers to trade,sanitary and phytosanitary measures,safeguards,rules of origin,agricultural products,textiles and clothing,government procurement,state-owned enterprises,investment,intellectual property,e-commerce,services for cross-border delivery,financial services,telecommunications services,culture,environment and climate change,labor standards,and dispute resolution.

Secondly,with its influence in the Asia-Pacific region,the US can attract more countries and regions to join in,and elevated the TPP from a trade order among a few members to a trade order in the Asia-Pacific region.As far as the trade sector is concerned,the US is still a major export market for most Asia-Pacific economies.In terms of regional security,the US is an important ally of Asia-Pacific countries such as Japan,South Korea,Australia,New Zealand,the Philippines,Thailand and Singapore.The US accession to the TPP will impose pressure on countries that have not yet joined the TPP and have not entered into RTAs with the US,and press them to join as soon as possible.Those countries that seek for US support in the area of regional security will also consider joining in order to strengthen their relationships with the US.As the number of members increases and the scale of trade expands,TPP members will build a regional economic structure based on TPP(Yamamoto Rosenbaum,2018).

Under the current APEC framework,the US has shifted from supporting FTAAP to actively promoting the transition of TPP negotiations.TPP has become a new platform for the US to shape the global trade order.As a“high standard and comprehensive”free trade agreement,TPP is different from the traditional free trade agreement model.It requires 100% of the goods to be freely traded in stages without exceptions.TPP covers a wide range of areas,which is much wider than the general free trade agreements and economic partnership agreements.Although the current economic size of TPP members is relatively small and the multilateral trade volume is not large,TPP members are diverse,and their members are at different development stages,comprising both developed and developing countries,market economy countries and countries with economies in transition,which makes it politically representative.By making new economic rules and expanding membership in the TPP,the US can turn domestic rules that benefit itself into regional rules.The US can also use this as a model to raise these regional rules into global rules through WTO negotiations.In this way,it consolidates its control of the world economy by building a new global trade order.Moreover,the TPP negotiations are conducted in a closed-door consultation,and the technical texts are not made public before the negotiations are terminated.This is also the strategy for the US and related parties to dilute the contradictions between members and highlight the final consensus.

There are two major obstacles for the US to reshape the global trade order in this globalization era.One is the agricultural protection force represented by the EU and Japan,and the other is the group of developing countries.The former mainly involves agricultural negotiations,while the latter involves broader issues such as intellectual property,investment measures,government procurement,environmental standards,and labor standards.In addition,some transitional developing countries also involve state-owned enterprise issues.

Japan had signed economic partnership agreements with 7 members of TPP before officially applying it.The negotiations with Australia had lasted for 16 rounds since its launch in 2007.Countries that have not yet signed FTA with Japan were the US,Canada and New Zealand.The biggest obstacle for Japan to join the TPP is the agriculture.The negotiations on the economic partnership agreement between Japan and Australia have lasted for five years.Due to Japan’s boycott of agricultural products,New Zealand had been reluctant to initiate negotiations with Japan and its economic partners till 2016.For US,it would be even harder to open Japan’s agricultural markets than Australia and New Zealand.

Whether or not to join the TPP was a political issue for the Japanese government.But for the US to approve of Japan’s accession to the TPP negotiations is also a dilemma.Despite the US’prospect that the participation of Japan will expand the influence of the TPP and attract other countries to join in,it still worried that Japan would insist on the exclusion of some agricultural products during the negotiations,which will lead to a decline in the standard of TPP.Moreover,the refusal of Japan to compromise may also lead to a protracted and even deadlock in the negotiations.

The purpose for the US and other agricultural powers to continue to support other countries to join the negotiations and exclude Japan was to put pressure on Japan.Had not Japan made major concessions on the issue of agricultural products,it would have been even more difficult to be admitted to join the TPP negotiations.Either way,Japan would be placed in a much more disadvantage position in regional and global economic competition.And if Japan had accepted the rules of agricultural openness,it would have been weakening the agricultural protection forces in multilateral trade negotiations and remove the obstacles for the US to promote the liberalization of agricultural trade under the framework of the multilateral system.

Developing countries have become an essential force that cannot be neglected in shaping the global trade order with their economic growth and powerful alliance.The main reason why developing countries boycott developed countries to implement new issues is the discrepancies in economic development levels.That is to say,due to the current economic situation,developing countries can not meet the high standards set by developed countries in the fields of intellectual property,environment and labor.In addition,they are less capable of dealing with external shocks,or to accept further opening its economy in goods,services and investment.If agreements in a wide range of fields can be reached in TPP negotiations,the US can take this as a bargaining chip for other developing countries to make compromises in the future multilateral trade negotiations

3 TPP and the US’ New Approach to Asia-Pacific Regional Cooperation

Politically,East Asia brings extremely important strategic interests to the US.The US is eager to maintain its long-term influence in East Asia.The strategic plan for East Asian economic integration from the US’ perspective is to endeavor to avoid establishing a close political and economic entity in the Asia-Pacific region (White,2015),since in such an entity the contradictions and suspicions among East Asian countries will be greatly reduced,but China,located at the advantaged geopolitical position in East Asia,will reap the greatest political benefits.However,high-quality regional public goods in East Asia means that the countries must be united by means of closer relations.In particular,China’s regional influence and voice will continue to expand,which is likely to challenge the strategic interests of the US in East Asia.After all,the interests of the US in the region are achieved by maintaining its dominance of regional affairs and making specific regional arrangements.In other words,deep economic integration and its inherent requirements for high-quality regional public goods have approached the strategic limits set by the US for East Asia.

For example,the East Asian economies are important financiers of the US fiscal deficit.As of June 2014,East Asian countries held a total of US$2939.5 billion in the long-term US Treasury bonds,accounting for 54.62% of the total oversea holdings of US Treasury long-term bonds (See Table 3).The purpose of East Asia’s highlevel regional investment cooperation is to enable the regional funds to serve the economic activities in the region,and enable the regional savings and foreign exchange reserves to serve the regional infrastructure construction,which will undoubtedly reduce East Asia’s financing for the US fiscal deficit.Thus,the high-quality regional trade order in East Asia requires the US’ full involvement is almost inevitable.

Since 2009,the US has gradually abandoned its benign neglect position toward East Asian economic integration,and turned to the TPP agreement for the comprehensive and deep involvement in the supply of public goods in East Asia.The TPP seeks to break through the traditional FTA model and reach a comprehensive free trade agreement covering commodities,services,investment,labor,environmental protection and other topics.As for 2015,there are already 12 TPP members,namely:the US,Japan,Australia,Canada,Singapore,Brunei,Malaysia,Vietnam,New Zealand,Chile,Mexico and Peru,of which the total economic scale accounts for nearly 40%of the world (See Table 4).On October 5th,2015,the initial member states such as the US successfully concluded the negotiations and reached an agreement on the text of the TPP.

Table 3 US Debt Held by East Asian Countries (USD million,2014)

Table 4 GDP of TPP Members and Their Shares (USD 100 million,2015)

TPP restricts the supply process of high-quality regional public goods in East Asia.For instance,TPP will make the East Asia’s original regional economic cooperation increasingly blurred.Strategically,the US divides East Asian countries into three categories:TPP member countries (Japan,Singapore,Malaysia,Vietnam,and Brunei),TPP candidate countries (South Korea,Thailand,Indonesia,and the Philippines),and TPP peripheral country (China).The direct effect of such classification is to differentiate and weaken the attraction of 10+3 and make the road of deep economic integration in East Asia even more arduous.The reason lies in that TPP has included one of the most powerful economies in the region—Japan,and South Korea has also expressed its willingness to join the list of the second round of negotiations,and ASEAN has also been split into the two major categories-TPP members and non-TPP members.Thus,it’s almost impossible to establish an independent integrated organization in East Asia.At least Japan has not given up the 10+3 cooperation as well as the China-Japan-South Korea FTA negotiations as it is actively pursuing the TPP.However,if the TPP continues to expand,it will be possible to integrate the two most important regional economic cooperation organizations in the region of APEC and ASEAN.When such situation occurs,the so-called 10+3 cooperation will be replaced by the TPP,thus becoming a fictional picture.

As so-called new generation trade deal,TPP is said to be comprehensive and progressive.TPP goes beyond simple trade topics,it puts a package of trade-investment-services as a negotiating component.The market access has expanded from the market access of industrial and agricultural products to the elimination of investment barriers and service industry barriers.The comprehensive liberalization of the economic field has become a focus of TPP negotiations.Secondly,the TPP topics deeply extend from economic and trade fields to social and institutional boundaries,it is targeted for the economic system within the contracting parties,aimed at achieving a seamless connection of all economies in terms of policies and systems.Thirdly,various TPP topics have strict requirements and thus exhibiting strong binding effect,which emphasize the use of judicial means to resolve implementation problems and disputes,thus making the binding force of economic rules from semi-judicial means (soft constraints) to judicial means (hard constraints).However,as is well known,the supply cooperation of public goods in East Asia itself lacks the inherent institutional binding force and development momentum.It has always been based on the principle of gradual progress,soft constraints and taking care of the comfort of all parties,and the emergence of TPP has greatly improved the institutional level of the regional economic cooperation in East Asia.But the existing open regionalism can not cope with the full and deep involvement of the US so that it can not provide a solution to effectively deal with external interventions for the deep economic integration,thus making the integration goal of deep economic integration in East Asia increasingly deviate from the integrative goal of promoting the regional economic development and the gradual integration of national economies.

4 The Competition Between TPP and RCEP

After 2012,facing the rapid development of regional trade order,the major economies in East Asia started to make strategic adjustments.The supply pattern of public goods in East Asia has undergone tremendous changes:The Regional Comprehensive Economic Partnership (RCEP) has become a new attempt for ASEAN-dominate supply of regional public goods in East Asian,and the“21st Century Maritime Silk Road”(Cheong &Tongzon,2013)initiative has become a new supply model of regional public goods led by China.

Under the competition of relative returns,countries can still achieve cooperation,but it is necessary to generalize the scope of cooperation.This is the internal logic for the shift of the public goods supply cooperation in East Asia from 10+3 to 10+6 as a highlight and for the initiation of RCEP negotiations.

4.1 Different paths of establishing the FTAAP

RCEP,which initially consists of 16 countries (include all 10 ASEAN countries and China,Japan,Korea as well as India,Australia and New Zealand),is the latest regional cooperation initiative in the Asia-Pacific region.On 15th November 2020,15 member countries(India pulled out of the deal in November 2019) signed the RCEP final agreement.RCEP member countries counted for about 30% of the world’s population (2.2 billion people) and 30% of global GDP($26.2 trillion) as of 2020,making it the biggest trade bloc in history.Overall,RCEP is to advance towards a“modern,comprehensive,high-quality and mutually beneficial economic partnership agreement(Cheong &Tongzon,2013)”on the basis of the integration of the existing free trade agreement/comprehensive economic partnership(FTA/CEP).RCEP is currently the largest regional trade and investment cooperation in the East Asian region.It not only covers the 10 countries of ASEAN and the three countries of China,Japan and South Korea in a strict geographical sense,but also absorbs the three countries of India,Australia and New Zealand in the sense of Pan-East Asia.

From the perspective of the East Asian regional trade order,RCEP includes Australia and New Zealand,which is the continuation and expansion of East Asian economic cooperation.After the introduction of RCEP,China and Japan have all supported this initiative,which is very rare given the troubled history of these two countries.Japan believed that RCEP’s 10+6 cooperation framework will help balance the influence of China while China might see ASEAN’s strategic intention of using RCEP to counterbalance TPP.RCEP has a clear-cut strategy of maintaining the central position of ASEAN (See Figure 1).Thus,even if the ultimate goal of RCEP is FTAAP,RCEP will objectively establish an East Asia economic cooperation framework that does not include the US as a medium and short-term goal.Thus,it has received clear support from East Asian countries.This does not mean that the original cooperation platform such as 10+3 is greatly weakened,but at least the current 10+6 cooperation serves as a major platform.Thus,in this sense,it’s reasonable to say that RCEP is a continuation of East Asian economic cooperation.

Figure 1 Path of Establishing the Free Trade Agreement of the Asia-Pacific (FTAAP)

4.2 Different framework of regional cooperation

RCEP chooses 10+6 as a framework to promote regional economic cooperation in East Asia while TPP chooses the APEC members as its base.After the 10+6 cooperation concept was proposed by Japan in 2006,the East Asian economic cooperation framework started alienation and resulted in the disputes on the path of 10+3 and 10+6.According to the negotiation principles stated by RCEP participants,ASEAN will make broader and deeper interactions with existing FTA partners,which is to advance based on the five ASEAN-centered bilateral free trade areas.Of course,RCEP is not just a bundle of five 10+1 free trade areas.However,under the circumstances where no bilateral FTA has been reached between China and Japan,China and India,Japan and South Korea,and India and New Zealand,it’s hard to advance the FTA negotiations among China,Japan and South Korea,RCEP will undoubtedly be a positive force in at least alleviating the disputes over the path of economic cooperation in East Asia,which serve to maximize the regional consensus.

RCEP aims to build a unified regional trade and investment cooperation,and its liberalization degree is higher than that of the existing five 10+1 free trade areas.However,in view of the gaps in the economic development levels and openness among the countries in the region,RCEP negotiations may include the full consideration of the flexibility and gradualness of various topics.For example,ASEAN adopts a differentiated policy for its“new members”(Cambodia,Myanmar,Laos and Vietnam).It’s clearly stated in RCEP Negotiation Guiding Principles and Objectives that it will recognize the individual differences and different environments of participating countries and provide appropriate and flexible means of participation for countries at different development levels,including the special and differential treatments for the least developed countries,so as to obtain the maximum mutual benefits.

Contrary to the TPP style high level,comprehensive,Americancentered agreement,RCEP is a continuation and development of the existing model of public goods supply in East Asia.Its member countries still focus on traditional trade policies and regulations,especially the market access issues of commodities,which have a positive impact on the supply of high-quality regional public goods in East Asia,but play a limited part in promoting the development of more targeted and urgent regional consumer markets and regional infrastructure.

For one,RCEP contributes to a unified,low-level regional trade cooperation,but exerts a limited effect on the development of a comprehensive regional consumer market.RCEP pays attention to the comprehensiveness of tariff concessions and promotes 90%～95%of the goods to reach zero tariffs.That is,the exception goods only account for 5%～10% (Das,2013).The ultimate goal is to gradually eliminate the tariff and achieve non-tariff barriers of all goods,which contribute to the formation of a unified regional trade cooperation covering all countries.More importantly,RCEP can promote those countries that cannot reach an agreement on a bilateral framework to work together in a unified regional framework,such as FTA between China,Japan and South Korea.

However,this unified regional trade cooperation is still at a FTA level,a rather low level for East Asian regionalism.In terms of trade in services,RCEP will be consistent with the rules and obligations of the WTO,but will be based on the commitments in ASEAN+1 model.However,in the China-ASEAN Free Trade Agreement,only Singapore,Malaysia,the Philippines and Thailand have the higher commitment than GATS.Vietnam and Cambodia have made no commitment.South Korea-ASEAN Free Trade Agreement is similar to this.Japan-ASEAN and Australia-New Zealand-ASEAN Free Trade Agreements are the same.In terms of economic and technical cooperation,China,Japan,South Korea,Australia,New Zealand,India and other countries have already implemented various types of assistance programs for ASEAN and established close cooperative relations.RCEP only provides the legal basis for this kind of cooperation.In terms of dispute settlement,although RCEP countries agree to set up a dispute settlement cooperation,it’s necessary for a strong dispute settlement cooperation to require the participating countries to transfer some of their economic sovereignty.In the East Asian region with the strong awareness of sovereignty,the efficiency and constraint level of this cooperation is rather limited.In addition,the topics such as labor standard,environmental protection,and government procurement,are not included in the list due to the opposition from the ASEAN countries.

RCEP will play a limited part in building a regional consumer union.RCEP aims to establish a modern,high-level,comprehensive FTA,and the opening of the trade in goods is still a priority.However,from the perspective of the opening of the trade in goods,RCEP is not a high level of free trade area.In terms of trade liberalization,it’s only slightly higher than the five existing 10+1 free trade agreements,which does not involve major topics regarding the construction of a comprehensive regional consumer market.In the case of the five 10+1 agreements previously signed by ASEAN,ASEAN has promised to exempt more than 90% of the goods after the transition period,and the three countries have promised to exempt nearly 90% of the goods after the transition period.Only Indonesia needs to significantly reduce its tariffs,and all the ASEAN target countries except India have promised to exempt more than 90% of their goods (Cheong &Tongzon,2013).Therefore,there is not much improvement in signing a new RCEP comparing with the exiting 10+1 agreements.Thus,although the goal of RCEP is to promote the opening of the East Asian market and build a large regional market,from the perspective of building a large FTA,it can play a very limited role in promoting the construction of regional consumer market.

In addition,RCEP helps to form a unified but low-level regional investment cooperation,it has a limited impact on the construction of regional infrastructure.Direct investment is one of the core topics of RCEP.The goal of RCEP is to create a free,convenient and competitive investment environment in East Asia.It includes the four investment topics:investment promotion,investment protection,investment facilitation and investment liberalization.RCEP aims to urge its member states to relax the access restrictions on foreign investment and to create a freer,more convenient and competitive investment environment within the free trade areas,thereby attracting more foreign direct investments.

Table 5 Comparison of Zero Tariff Commodity Items in the ASEAN+1 FTAs

The exiting 10+1 agreements,although most of them contain investment agreements or investment chapters,their content is still mainly on investment promotion and investment protection.There is insufficient discussion on investment facilitation,and even less involving investment liberalization.In comparison,the liberalization level of the service industry in ASEAN countries is lower than that of the manufacturing industry1.In addition,the investment rule standards in the five 10+1 FTAs are inconsistent.For example,in the ASEAN-Australian and New Zealand Free Trade Agreement,Australia and New Zealand have placed higher requirements on ASEAN for their own interests.For example,it’s required in the Performance Requirements Prohibition Clause (PRPC) that all parties must not violate the requirements of the Trade-Related Investment Measures Agreement (TRIM) under the WTO framework in the activities regarding establishment,acquisition and merger,and there are higher requirements for transparency.However,it’s difficult for RCEP to reach a consensus on the integration of the investment provisions in the five 10+1 FTAs,so its regional investment cooperation is destined to stay at a low level.

There is almost no mentioning of the construction of regional infrastructure-the most important regional public goods for the deep economic integration of East Asian countries.This is probably the biggest defect of RCEP.Currently,RCEP can only provide the most basic facilitation for the construction of regional infrastructure by means of low-level investment cooperation.All of the above statements show that:RCEP is only a form of regional economic cooperation in a traditional sense,but not a regional economic integration path.It has a positive impact on the construction of regional investment systems,but has limited contribution in promoting the construction of regional infrastructure as a key regional public product.Thus,it can only help to partially break the supply dilemma of public goods in East Asia.

So basically,according the frameworks and designed paths,it is fair to say that TPP,despite its high-level and comprehensive new trade deal,has very little or even negative impact on East Asian regional integration because TPP is a mostly consisted with bilateral agreements and put the US at the core.On the other side,RCEP,despite still at the FTA level,is a multilateral regional trade agreement which could put major countries in Asia-Pacific at a equal level.Although RCEP includes the countries outside the East Asia,it will build a solid platform for the future much tighter and closer regional integration in East Asia.

5 CPTPP-TPP Without the US

On 23th January 2017,just one day after being sworn in,President Trump signed a presidential memorandum to withdraw the US from the TPP.This administrative initiative would lead US trade policy into a new era.The Trump administration will seek bilateral trade opportunities with its global allies.This was a strong signal that the Trump administration wanted to achieve free and fair trade around the world,but it also showed the unilateralism found its way to American foreign policy.

All the US foreign trade according to Trump,must be conducive to the goal of purchasing American goods and hiring Americans.In general,after Trump withdrew from the TPP,almost 14 multilateral and bilateral free trade agreements signed by the US were basically in great uncertainty.The basic path of liberalization has begun to shift to a one-to-one bilateral model from the multilateral framework that the US government have been pursuing for many years.For all foreign countries,Trump pursued the advantages of a one-on-one deal with a zero-sum game mentality.

The US mainstream financial media basically conceded that withdrawing from TPP will have a long-term impact on the United States strategic interests in Asian-Pacific,and it will benefit China,particularly the China-lead regional multilateral trade agreement－RCEP.But the truth is,the withdrawal of the US has no direct influence on China.China will still follow its set agenda,which is to promote regional trade and investment liberalization.Whether it is China or the countries in East Asia,multilateralism,represented by multilateral agreement like RCEP will be pursued more eagerly.Clearly,the United States has shifted its focus to one-on-one bilateral trade negotiations.In this regard,China and East Asian countries must also plan ahead and face the aggressive new trade protectionist offense or pressure.

After the US withdrawal from the TPP,in January 2018,the remaining eleven countries agreed on a revised TPP,now renamed as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).The agreement remains substantially the same,but a list of 20 suspended provisions were added to the TPP under the US’s insistence and that are now no longer binding.These provisions primarily relate to investment,government procurement and intellectual property.Interestingly,on 25th January 2018,U.S.President Donald Trump in an interview announced his interest in rejoining the TPP if it were a“substantially better deal”④But also in this interview,Trump still insisted that he preferred a series of oneon-one style bilateral trade deals over a multilateral trade agreement.It just indicates once again,the US trade policy particularly regarding Asia-Pacific is back on unilateralism which in Trump’s word is“America First”.With Trump lost the 2020 presidential election,the new Biden administration has announced its new approach“to multilateralism and re-imagine the future of U.S.economic leadership in Asia”⑤.So,the battle is still on between TPP (CPTPP) and RCEP

6 Conclusion

When the Cold War came to an end,the then US Secretary of State James Baker famously said that it would be a mistake for the United States to permit a line to be drawn down the middle of the Pacific (Baker,1991) with the US on one side,separated from Asian countries on the other.However,the truth is that the current East Asian regional integration models,whether 10+3,10+6 or RCEP,all excluded the United States from their formulations.So the TPP served a purpose of the US to regain,alter or even rewrite the rules making procedures and the path of the future East Asian regionalization with the US dominating APEC framework.

The other purpose of the TPP from the US perspective was that it was a major part of the Asia-Pacific Re-balance strategy.This strategy is expected to inject Asia Pacific with US commitment,economic and military resources,an attempt to guarantee America’s political,economic,and security interests in Asia.For the US,this strategy is similar to America’s efforts to establish a comprehensive system of international organizations after the WWII (Clinton,2011).

As a major exporting country of goods and services since the WWII,the US has created the post-WWII international economic order based on the GATT/WTO,this post-war order has also put the US at the center of the international system till this day.With the decline of the US in international trade,particularly after China joining the WTO,the newly industrial economies’ share of world goods exports has risen rapidly,making them active defenders of the existing multilateral international trade order.As a result,China is in a competition with the US in rebuilding the international trade order.When Donald Trump withdrew the US from the TPP,he claimed his policy as“America First”which indicates the future US trade deals will focus on bilateral negotiations with a clear tendency towards the unilateralism and protectionism.This move doesn’t mean America will not seek to include China or give up its control over the regional order,but rather demonstrated that this new administration will reshape the East Asian regional order through existing bilateral alliances.

Notes：

①A“Spaghetti bowl”refers to the“spaghetti bowl effect”.It is a derivative of free trade agreements (FTAs) that serve as an alternative for internationalization other than options like multilateral WTO negotiations.It indicates that too many crisscrossing FTAs would form a costly complication of international trades,which would enable countries to employ discriminating trade policies that would reduce trade welfare in turn (Bhagwati,2003).

②See Trans-Pacific Partnership Leaders Statement.http://www.ustr.gov/ about -us/ press -office/ press -releases/ 2011/november/trans-pacific-partnership-leaders-statement,November 12,2011.

③See Chairman Statement of the 8th ASEAN+3 Summit.http://www.aseansec.org/16847.htm,November 29,2004.

④Pramuk,J.(25 January 2018).Trump:“I would reconsider a massive Pacific trade deal if it were ‘substantially better’ ”.CNBC.Retrieved from https://www.cnbc.com/2018/01/25/trump-says-he-would-reconsider-trans-pacific-partnershiptrade-deal.html.

⑤Biden will likely have to re-imagine the future of U.S.economic leadership in Asia,says expert.(n.d.).https://www.msn.com/en-us/money/markets/biden-will-likely-have-toreimagine-the-future-of-us-economic-leadership-in-asia-saysexpert/ar-BB1biCgF.