Is RCEP Actually China-Led?

ASEAN be like: “We came up with the idea. But sure.”

There are two mega-regional trade agreements on the table at the moment, Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP). So far, the two have always been cast as alternatives in a geopolitical game with TPP being US-led and RCEP China-led. Gardiner Harris and Keith Basher in NYT referred to it as such. Asian leaders seemed to think so. Japanese PM Shinzo Abe said, “There’s no doubt that there would be a pivot to the RCEP if the TPP doesn’t go forward.”

Yet is it actually? Is RCEP actually China-led? Leadership and dominance in a free trade negotiation are hard to gauge, but there are several metrics to consider them.

First, inception. It was not China who initiated RCEP. It was ASEAN. It wanted to harmonize its free trade agreement (FTA) with its partners; namely Australia, China, Japan, India, New Zealand,and South Korea. Lo and behold, these ASEAN FTA partners and the 10 ASEAN members become the negotiating countries of RCEP. The document Guiding Principles and Objectives of Negotiating the RCEP even stated that only an ASEAN FTA partner that can join the RCEP negotiations (Principle 6). Any external country can join later after the completion of negotiations.

Second, size. There is no question that China leads RCEP in this one. It is the largest national economy in RCEP. China is the second largest economy globally and the first, America, is not inside RCEP negotiations. But its first rank in size shouldn’t be overrated. RCEP also contain other big players. The combination of India and Japan alone are enough to outsize China.

Third, agenda-setting. The size of an economy doesn’t really matter in an FTA if it doesn’t translate to the power of setting the agenda. And on this score, China’s size hasn’t been overbearing on RCEP’s agenda. True, RCEP is set to feature less ambitious tariff targets and chapters than TPP. This is in line with China’s interests as an emerging market, as opposed to the US as a developed country in TPP. Yet, other countries also wielded enough influence to set agenda that might not be in line with China’s. The inclusion of the chapter on intellectual property rights pushed by Japan is one example. Shintaro Hamanaka did a great documentation of how Japan pushed its agenda in both RCEP and TPP negotiations by leveraging its participation in both. India has also shown its influence in tailoring the agenda towards its interests. (One of the reasons RCEP negotiations has dragged for so long is India’s request for a three-tiered tariff schedule.) Adroit diplomatic skills matter and China hasn’t exactly been omnipotent in this score.

Fourth, regional vision. The commentariat seemed to love pointing out that the US is excluded from RCEP negotiations. This is factually correct. So did Canada, Mexico, Chile, and Peru: all countries bordering the Pacific Rim not on the Asian continent. RCEP contains only countries bordering the Pacific and/or Indian ocean. I concur with Jeffrey Wilson’s argument that this vision of RCEP is a vision of an Indo-Pacific regional economic order, while TPP’s is a vision of an Asia-Pacific one. With TPP dead so far (thanks to Trump), the only regional trade negotiation game in town is one that will strengthen this order. This is in line with China’s regional vision, to shift the gravity of economic activity towards Eurasia centered on it. One needs only to look at China’s grandiose One Belt, One Road plan to see this.

So yes, the claim isn’t a lie. Or as Kellyane Conway said, it isn’t an alternative fact. We can say RCEP is led by China, but not by too much. It is the largest economy there and RCEP’s regional vision and overall agenda conform with China’s. But it was not initiated by China and Beijing has no overarching monopoly in setting its agenda.

Photo courtesy of the Korea Herald.

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