It would then be in a position to dictate the terms of trade within and beyond the region the CPTPP covers. The fact that China’s nominal GDP is significantly higher than the combined GDP of the 11 CPTPP members, as well as its commercial centrality in the region, would provide Beijing with a powerful leverage to negotiate exemptions favorable to its state-capitalist business model, within the framework of membership talks or to dilute existing commitments once a member of the club.īeijing may find it difficult to follow CPTPP requirements, but formal membership would place China, which is already at the heart of RCEP, at the centre of all regional trade. And the country is in a supremely powerful position to get its way: as two professors from the University of Adelaide recently noted: China’s request is in itself likely to divide member states and weaken the scope of the agreement. The absence of the United States from the arrangement singularly weakens the formal guarantees offered by the treaty. It cannot be taken for granted that CPTPP member countries will reject China’s membership application, given the growing asymmetry between China and its partners.
However, China’s recent bid to join the CPTPP in the aftermath of the AUKUS announcement could radically alter this intention. The CPTPP, by contrast, does not formally exclude China but does seek to limit Beijing’s imprint on trade and norm-setting in the region. The RCEP underlines the centrality of China, which is by far the most powerful of all RCEP economies. The two agreements, whose memberships partly overlap, induce radically opposed geopolitical dynamics. This last item is intended in particular to prevent predatory state intervention in the markets, via Chinese firms in particular. It covers trade in services as well as in goods, and sets high standards for digital trade, intellectual property, public procurement, anti-corruption, labour matters and, crucially competition and public enterprises. The other, more ambitious, agreement is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which succeeded the Trans-Pacific Partnership (TPP) after the Trump administration withdrew from the latter. One agreement, the Regional Comprehensive Economic Partnership (RCEP), is a traditional trade in goods agreement, initiated by the Association of Southeast Asian Nations (ASEAN). Indeed, the recent signing and implementation of two major regional trade agreements is a game-changer for the Indo-Pacific – and for the rest of the world.
But they have recently been catching up, knitting a dense set of bilateral trade agreements with their neighbours as well as faraway partners across the Pacific Ocean and the Eurasian continent. Globalisation fatigue and public opinion have discouraged governments from pursuing such accords.Įast Asian countries came later than other regions to trade integration. But, where Western powers in general and Europe in particular were once in the vanguard of regional integration, they have grown reluctant to conclude new trade agreements. Indeed, the vast majority of EU member states see the Indo-Pacific as a place of huge and unparalleled economic opportunity. The region is today the second largest destination for exports from the European Union and is home to four of the bloc’s top ten trading partners.
For decades, trade and investment have been at the heart of Europe’s approach to the countries of the Indo-Pacific.
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