The Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

On 15 November 2020, ministers from 15 countries, including Australia, signed an agreement initiating the Regional Comprehensive Economic Partnership (RCEP), a regional trading arrangement that has been described as ‘the world’s largest free trade agreement’. The other signatories comprise the ten ASEAN states—Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam—as well as China, Japan, Korea and New Zealand.

The RCEP Agreement will enter into force 60 days after six ASEAN Member States and three non-ASEAN Member States have ratified it. China has expressed the hope that this will occur by early 2022. RCEP negotiations were launched in November 2012 and initially included India. In recent years, India has indicated that it has some concerns about participating in the RCEP and declined to sign the agreement. The RCEP signatory states are, however, still anxious to have India participate in the arrangement.

Following the signing, the Australian trade minister, Simon Birmingham, and the Prime Minister issued a media release claiming the deal would ‘boost export opportunities’, and the Department of Foreign Affairs and Trade has been expounding the potential benefits of the arrangement. The Joint Standing Committee on Treaties (JSCOT) inquired into the RCEP Agreement, with Australia working towards ratification in late 2021, and in its August 2021 report noted: ’RCEP is not a particularly ambitious trade agreement, and in terms of market access does not deliver much in the way of additional benefit for Australia,’ but still urged ratification. The Government has also now introduced the Customs Amendment (Regional Comprehensive Economic Partnership Agreement Implementation) Bill 2021 and the Customs Tariff Amendment (Regional Comprehensive Economic Partnership Agreement Implementation) Bill 2021.

However, the changing international political climate, and the competing trade agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), may well affect the benefits expected to flow from the RCEP. Former prime minister, Malcolm Turnbull, has described the RCEP as ‘old-fashioned’ and ‘a really low ambition trade deal’, while the Australian Council of Trade Unions has urged renegotiation of the RCEP agreement, arguing that it offers insufficient labour protections and that it legitimizes the Myanmar military junta.

The Secretariat of the RCEP is located within the ASEAN Secretariat in Jakarta, and the bloc is an ASEAN-centred arrangement, emerging as an ASEAN version of the mooted Comprehensive Economic Partnership in East Asia (CEPEA). By including China, this was also an alternative  to the Trans-Pacific Partnership (TPP), a  US-led deal being concurrently negotiated, that excluded China but included many other Asian countries.

And China has been assiduous in demonstrating leadership of the RCEP grouping. While most members are still struggling with the ratification process, the PRC is already using the arrangement to strengthen its economic links with Southeast Asian states. China sees the new bloc as a means to ‘significantly counter the numerous pressures from the China-US economic decoupling and changes in supply chains’. The benefits of the pact for China have also been outlined by PRC international affairs adviser Wang Huiyao, who sees it as a mechanism to ‘catalyse Asia’s long-term integration’.

The PRC promotional push began early with Yunnan Province holding its first RCEP Yunnan Experts Dialogue (Chinese language site) in December 2020, a month after the agreement was signed. A China business group RCEP initiative was launched in February this year. In April, the PRC established an RCEP Industry Cooperation Committee in Beijing, with business and industry representatives of the 15 RCEP signatories. Australia was reportedly represented by the chair of the Australia-ASEAN Business Council and the CEO of the Australian Chamber of Commerce and Industry in China. Most Southeast Asian states were represented by ethnic Chinese business figures from those countries. Beijing is also organising RCEP training courses (Chinese language site) for Myanmar officials, and the China Council for the Promotion of International Trade records China’s RCEP activities on a new website (Chinese language site) under its China-ASEAN Business Council.

In May, the Propaganda Department of the Hainan CCP Provincial Committee held an RCEP Media and Think Tank Forum, bringing together media, think tanks, embassy officials and business representatives from South Korea and various Southeast Asian countries. The only Australian engagement was through an online presentation by former prime minister, Kevin Rudd (Chinese language site). Xinjiang is also now promoting RCEP cooperation (Chinese language site) with Myanmar, Vietnam and the Philippines.

Concurrently, the PRC is pushing for Hong Kong to be accepted as a further member of the RCEP and has achieved at least unofficial endorsement of this idea from ASEAN officials. The momentum for promotion of Hong Kong’s participation, and thus a doubling of China’s RCEP membership, is now being accelerated.

Meanwhile, Australia is continuing to promote the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which is a free trade agreement between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam. The CPTPP agreement was signed by the 11 countries on 8 March 2018 in Santiago, Chile and incorporates many of the provisions of the defunct Trans-Pacific Partnership (TPP) Agreement. The proposed TPP had been the main economic pillar of the Obama administration’s ‘pivot’ to the Asia-Pacific, but it sank after President Trump withdrew the US from the ratification process. The successor CPTPP has now entered into force for seven of the signatories, including Australia. While the partnership does not include China, Chinese leader Xi Jinping indicated in November 2020 that the PRC will ‘favourably consider’ joining the CPTPP. However, the CPTPP has strong rules on subsidies, labour laws, data flows, transparency and environmental protection, which would likely require China to undertake some far-reaching reforms.

The Parliament’s Joint Standing Committee on Foreign Affairs, Defence and Trade - Trade Sub-committee is currently conducting an ‘Inquiry into expanding membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership,’ to which the PRC Embassy in Canberra has made a submission promoting China’s potential membership of the CPTPP.

On 1 February 2021, the United Kingdom requested accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and on 2 June 2021, the CPTPP Commission agreed to formally commence accession negotiations with the UK. Other potential CPTPP members include the US, South Korea, Indonesia, Thailand, the Philippines and Taiwan. If the US were to join the body, it would likely indicate stepped-up ‘US commitment to allies and institutions in the Indo-Pacific’, and markedly change regional dynamics.

Originally conceived as two distinct trading blocs, the formerly US-led TPP (now CPTPP) and the China-backed and nominally ASEAN-led RCEP have evolved into two overlapping bodies. Seven of the 11 CPTPP members, including Japan and Australia, are intersection economies also belonging to the RCEP. Professor Choong Yong Ahn, the former Chairman of Korea’s Commission for Corporate Partnership, is perhaps overly optimistic when he suggests that ‘an expanded CPTPP, with a re-joined United States and newly joined China, alongside other wishful entrants from RCEP’ might ‘help create progress toward APEC’s long-cherished goal of creating a Free Trade Area of the Asia Pacific (FTAAP), identified as a goal by APEC leaders as early as 2004’. Rather, it seems more likely that if the US were now to join CPTPP—as its allies and some domestic constituencies are urging—China would remain outside and the original distinction between the two blocs would see a marked strengthening, giving rise to more complex contention in their respective economic and political aspirations.



Flagpost is a blog on current issues of interest to members of the Australian Parliament

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