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Rethink the political consequences of RCEP TOU

Rethink the political consequences of RCEP

This is the third in a four-part series focusing on RCEP’s economic and political implications.

The Regional Comprehensive Economic Partnership (RCEP) came into force on 1 January, with 11 of the 15 signatories expected to complete ratification by 1 February. China’s official media has already begun to highlight the benefits of the RCEP, highlighting the “wave of early deals”. This is because Chinese companies use the new regime of low or non-tariffs and the invisible rules of origin (ROOs) constraints. In fact, there is widespread excitement that RCEP, which, among other things, lowers tariffs, reduces ROOs barriers, opens service areas, reduces paperwork and improves protection of intellectual property rights, is significant for foreign direct investment (FDI). Will bring positive results. ) And trade. Moreover, RCEP can expand not only for further trade and investment reforms, but also with the addition of new members like Hong Kong or India. As we have shown in the previous two parts FDI And TradeHowever, the reality is likely to be more complex for FDI in terms of the actual import of RCEP and the large trade writ, the impact on individual RCEP members and the regional implications.

As in the case of trade and FDI, the traditional wisdom about the political implications of RCEP exists. Among other things, pundits have called RCEP a “A geopolitical victory for China, as it helps the regional giant to formalize and strengthen relations with other countries.” The integration of East Asia revolves around China and enhances China’s role in determining the rules of the economic game in the Asia-Pacific region. In addition, it has promoted China’s soft power as Beijing has worked collaboratively and flexibly throughout the RCEP negotiation process and has painted itself as a defender of globalization. The RCEP will further China’s attraction as an FDI destination and its importance in the Asian supply chains, which, many believe, will in turn increase its political advantage and importance. To top it all off, all this momentum is taking place at a time when there are no indications that the United States will present its significant alternative to the RCEP after withdrawing from the Trans-Pacific Partnership (TPP) in 2017. And, India, one of Asia’s economic heavyweights, withdrew from signing the RCEP due to concerns about the potential adverse effects of the agreement, to ensure that it could not play a hostile role against China within the RCEP.

Is RCEP really a “Rebellion for China” Has a big money-center bank portrayed it? Our position is that the RCEP is an unrivaled geopolitical victory for China, which has numerous shortcomings with the view that it is a very big victory.

First of all, as many thoughtful observers have pointed out earlier, it was the Association of Southeast Asian Nations (ASEAN) that led the RCEP negotiation process and brought RCEP to fruition. Separately, the birth of the RCEP is unlikely to result in China gaining leadership issues and it is being concluded that ASEAN and other Asia-Pacific states will make decisions based on China’s pro-globalization rhetoric instead. Functions

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Another point is that, as our previous sections have shown, the FDI and trade effects of RCEP are unlikely to be dramatic. Given this, it is difficult to see what kind of significant “link strengthening” will take place. Furthermore, given the current circumstances, it is difficult to imagine a change in relations with China, given that Japan or South Korea – two RCEP member countries with which China’s link is most likely to strengthen. China has never signed a trade agreement before. Nor will China significantly improve its political relations with Vietnam, the Philippines or Australia because of the ratification of the RCEP.

The third drawback is the assumption that the RCEP will empower China as a rule and standard setter. RCEP rarely incorporates new rules and norms and, in many respects, introduces recognition of dominant neoliberal norms. Some will argue that RCEP strengthens the terms of the lower standard agreement in favor of China, but it is difficult to argue that other RCEP partners, in general, wholeheartedly accept the high-standard agreement and accept lower standards due to China.

There are many other significant limitations to the traditional wisdom about the political implications of RCEP. To begin with, it ignores the fact that there will be numerous negative economic implications for some RCEP members of the RCEP or certain sectors that have signed the RCEP. For example, trade deficits may increase; Commodity composition can change in an undesirable direction; And there could be deindustrialization and FDI diversion. As we have shown elsewhere in our analysis of China’s economic relations with other countries, these negative effects RCEP can eliminate or dilute whatever positive political effects it produces for China.

Furthermore, conventional wisdom ignores the fact that RCEP exists amidst complex environments. This challenging environment includes regional and maritime disputes such as the South China Sea dispute, flashpoints such as North Korea and Taiwan, political conflicts over human rights, security of supply chain and data flow, concerns about China’s political influence in governments and universities. Concerns about the media, and the Belt and Road initiative. RCEP members and the countries of the greater Asia-Pacific region will make decisions about China based on these and other factors, not just the RCEP. Moreover, Tokyo, New Delhi and Washington are not stable, however, at this point, they seem unable to advance their own regional economic integration initiative, the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP).

Our analysis has various policy implications. First and foremost, the story is not over – capitals need to quietly evaluate the effects of RCEP. Turning to those who are concerned about the RCEP’s supposed victory for China, they need to understand the fact that there are many areas where they can eliminate or eliminate the adverse political consequences of the RCEP. For example, they may enhance their own economic relations with RCEP signatories or place special emphasis on addressing political or security issues.

Speaking of China, Beijing needs to avoid overconfidence. If he wants to increase the political value of RCEP, he has to make sure that RCEP offers not only economic benefits but also balanced economic benefits. Beijing also needs to know that its actions in the political and security spheres will affect the political benefits it receives from the RCEP.

Our discussion of the political implications of RCEP is also conducive to business people. The political fluidity we have published means that companies will need to constantly monitor the situation inside and outside the RCEP region. It also suggests that companies, if any, may have the potential to influence the political environment through their home governments, industry associations or other means.

A recent editorial details the implementation of RCEP “A day of new economic and geopolitical realities in East Asia.” As this analysis and our previous two pieces in this series show, we do not see significant changes in the earlier context and rarely take the latter as given. We certainly do not believe that the RCEP is devoid of political influence or that China will receive anything politically from the RCEP. Indeed, our main point is that the game is still in the first quarter and not in the final minutes.

In the final part of this series, we intend to examine the effects of RCEP for digital trading.

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