There have been sensational headlines about the Regional Comprehensive Economic Partnership (RCEP) treaty, signed between a huge swath of Asian countries and China.
It is, however, important to bear in mind that the pact is political first and its economic impact will not be known for some time.
According to preliminary reports, the treaty is an anti-tariff pact to facilitate free trade between 16 countries, mainly in Asia, but also Australia and New Zeeland.
Experts describe the treaty as Asia doing business with Asia.
On the quantitive side, according to the Atlantic Council, the treaty is “bringing together about 30 percent of world’s population and gross domestic product (GDP) under the new free trade agreement. This new arrangement will compete with the European Union (EU) as the world’s largest trading bloc, and will be the most important economic configuration in Asia, totaling a 27.4% share of global trade, compared to 15 percent for the Comprehensive and Progressive Agreement for TransPacific Partnership (CPTPP).”
The primary reason why the corporate-owned media has focused on the RCEP is because of America’s exclusion and that the treaty was facilitated by China.
This is a political development and another signal among many in recent years of the emerging multi-polar world order.
RCEP is an economic manifestation of the reality that the US is no longer the global hegemon.
However, in economic terms the treaty may not be as spectacular as many seem to interpret.
RCEP member states already do trade with each other with minimal tariffs.
The treaty does not address most of the non-tariff barriers and has limited aspects touching the agriculture sector.
The treaty will come into force after two years when the members ratify it.
For political reason, this might be delayed or some parties might change their mind.
India did not join the treaty because according to the Business Standard it feared that its “industries would be unable to compete with China and Chinese goods would flood Indian markets. India’s farmers were also worried given that they would be unable to compete on a global scale.”
The other, unstated reason is that India wants to stay in the US camp.
The incoming US regime might also seek to pressure some RCEP members to withdraw from the treaty or stall it by seeking amendments.
That is, if Donald Trump peacefully vacates the White House in January 2021.
Also, the treaty might not be as beneficial for China as it is projected in the media.
Japan and South Korea, however, will get broad access to Chinese and other economies.
Both have established a reputation for high quality products and services that are superior to China’s.
Globally, China’s role is rising primarily because it has adopted the West’s economic paradigm.
Its rise, however, needs to be assessed in realistic terms.
Simply because China’s initiatives are eliminating the US’ brutal hold on the world does not necessarily mean that Beijing’s initiatives should be uncritically accepted as positive for others.