China Center for International Economic Exchanges

Wei Jianguo: Keeping Our Strategic Focus on the RCEP
Date:Nov 15,2017    Source:CCIEE

The announcement of a new deal reached by the 11 members (the US is excluded) of the Trans-Pacific Partnership Agreement (TPP) during the APEC summit has had a big impact on China and the rest of the international community. Some people reckon that comparing with the progress of the TPP, the Regional Comprehensive Economic Partnership (RCEP), led by China, is kind of behind schedule. Others believe that the new agreement will affect the RCEP because four member countries of the new "TPP 11" are also members of the RCEP, and they even suggest that China should rethink its previous attitude towards the TPP.

I think these views are not made according to the matter of facts due to the following three reasons.

First, we should get a clear understanding of the role of Japan in the TPP. In today's world, the US has stepped back and is unwilling to hold high the great banner of trade liberalization. China is gradually bringing its opening-up to a higher level. Japan can no longer count on the US but it definitely does not want to see China replace the US becoming the holder of the banner.

In order to reach the new TPP at the APEC summit, Japan worked painstakingly before and after the summit, hoping that the "TPP11" will make it a great political power so that it can play a leading role in the Asia-Pacific region in the next five to ten years.

At present, Japan's attitude towards the RCEP remains unclear. It does not explicitly say that it has no interest in joining the RCEP, nor does it invite China to join the new TPP. One thing we can see clearly is that Japan feels resentful to the RCEP. Despite its effort, Japan has only reached a semi-finished agreement that does not involve all the original rules of the TPP. On the one hand, it wants to make the RCEP less appealing with the so-called higher standard agreement. On the other hand, it wants to give itself more bargaining power for any possible negotiation on the RCEP and take more advantages of it.

Second, we should give other countries more time. The RCEP negotiation involves a large number of participating countries and covers a wide range of issues, not to mention the huge gap in economic development between them. All these factors will make the negotiation a lengthy process. Some of the countries that have already taken part in TPP11 have doubts about whether the move to follow Japan will infuriate China, while other countries have not fully recognized the vision of the RCEP. Therefore, we should give these countries enough time to figure things out.

From the perspective of geopolitics, the cliquish nature of the TPP is the fundamental reason for its failure, as it impedes trade liberalization and investment facilitation. In his keynote speech at the APEC CEO summit, president Xi Jinping pointed out that all countries should strive to build a regional cooperation framework which features equal consultation, broad participation, and common interest. Moreover, we should jointly establish an open economy in Asia-pacific to promote trade and investment liberalization and facilitation. I hope that the countries that are still wavering will understand that fairer and more equal trade rules are much better than a cliquish and exclusive deal. The new TPP will sooner or later wither on the vine and the swing countries should change their attitude and make the right political decisions.

Last but not least, we should keep our strategic focus on the RCEP. For the first time, China plays a leading role in a regional free trade agreement (RCEP), thus, it is normal for other countries to have hesitation, concerns or even want to reject it. In essence, the RCEP is a great platform for countries in Asia-Pacific to strengthen interconnectivity and realize linked development. It also helps the Asia-Pacific to lead the global economic recovery and is the key to solve the problem of global governance. The preliminary conclusion of the new TPP has no impact on the RCEP, and the RCEP negotiations will follow the pace of its own. In the future, China will accelerate the negotiation on the RCEP and FTAAP, and I believe that other countries will start to see their advantages soon.

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