Leaders from 15 Asia-Pacific nations on Sunday signed what analysts have said by some measures is the largest free trade agreement in history. The 10 members of the Association of Southeast Asian Nations joined up with Australia, China, Japan, New Zealand, and South Korea to cement the pact, which could add nearly $200 billion to the global economy by 2030, according to some estimates.
While The Financial Times described the Regional Comprehensive Economic Partnership as a “fairly shallow agreement” that is not expected to lead to large overall tariff reductions, it’s still considered a step toward making Asia a more coherent trading zone, akin to the European Union.
But what could it mean for the United States? The U.S. has taken a step back from global trade under President Trump’s preferred protectionist policies, which led to a withdrawal from the controversial Trans-Pacific Partnership. Yet Japan, for one, hopes that the RCEP agreement, will inspire the incoming Biden administration to jump back into the fray. The president-elect, however, has remained non-committal to entering new trade pacts, which have sparked bipartisan discontent in recent years. He instead seems likely to set his focus on domestic economic revitalization, at least during the early part of his Oval Office tenure.
That means China could assert itself even more as the leading voice on regional trade matters in the Indo-Pacific, especially because India is absent (for now) from the new agreement, as well, FT reports. Jennifer Hillman, a senior fellow for trade and international political economy at the Council on Foreign Relations, told The New York Times she believes that, despite Biden’s priorities, “there are going to have to be some responsive actions to what China is doing” because “the rest of the world is” probably not going to wait for the U.S. to get “its house in order.” Read more at The Financial Times and The New York Times. Tim O’Donnell