The Huge New Trade Deal ‘Western’ Media Do Not Like To Talk About
DISPATCHES FROM MOON OF ALABAMA, BY "B"
This article is part of an ongoing series of dispatches from Moon of Alabama
Tomorrow a new trade agreement between 15 Asian states will be signed. It will soon be seen as a milestone in the global economic history. But only very few 'western' media have taken note of it or of the huge consequences the new agreement will have.
The agreement is also a huge victory for China over U.S. hegemony in Asia:
Fifteen Asia-Pacific nations including China and Japan plan to sign the world’s biggest free trade deal this weekend. The FTA will cut tariffs, strengthen supply chains with common rules of origin, and codify new e-commerce rules.
The Regional Comprehensive Economic Partnership (RCEP) is expected to be announced at the Association of Southeast Asian Nations (ASEAN) Summit, which Vietnam is hosting virtually. It will involve the ten member states of the ASEAN bloc – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – as well as their trade partners Australia, China, Japan, New Zealand, and South Korea.
The new economic bloc will thus represent around a third of the world’s gross domestic product and population.
It will become the first-ever free trade agreement to include China, Japan, and South Korea – Asia’s first, second and fourth-largest economies.
The economies of the RCEP members are growing faster than the rest of the world. The agreement is likely to accelerate their growth.
India is the only country that was invited but is missing in the deal. Its Hindu-fascist Modi regime had bet on the U.S. led anti-Chinese QUAD initiative pressed for by Trump and Pompeo and thereby lost out in trade terms:
Prime Minister Narendra Modi’s remarks at the 17th ASEAN-India Summit on November 12 makes sad reading. It comes in the specific context of the signing of the Regional Comprehensive Economic Partnership [RCEP] on Sunday — the mega free trade agreement centred on the ASEAN plus China, Japan and South Korea.
Modi avoided mentioning RCEP, although it signifies a joyful occasion in ASEAN’s life as much as Diwali is for an Indian. He instead took detours — ‘Make in India’, ‘Act East Policy’, ‘Indo-Pacific Oceans Initiative’, ‘ASEAN centrality’.
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To be sure, RCEP heralds the dawn of a new post-Covid regional supply chain. As a new RCEP supply chain takes shape, India has not only excluded itself but is unwittingly facilitating its “arch enemy” China to become the principal driver of growth in the Asia-Pacific.On the other hand, extra-regional economic ties cease to be a priority for the ASEAN, in relative importance. There isn’t going to be any takers in the Asia-Pacific region for even a partial US-China “decoupling”. The RCEP is in reality an ASEAN-led initiative, which is built on the foundation of the six ASEAN+1 FTAs and it secures ASEAN’s position at the heart of regional economic institutions.
The U.S. Pivot to Asia, launched under the Obama administration, as well as the anti-Chinese 'decoupling' initiatives by the Trump administration have thereby failed.
One would have expected that such a gigantic trade agreement with its extensive geopolitical consequences would find some echo in the U.S. media. But a search for 'RCEP' on the site of the New York Times finds only one mention from 2017. It is about a letter five U.S. ambassadors had sent to warn of the demise of the Transpacific Trade Agreement, an Obama initiative that excluded China:
The partnership, called the TPP, was a hallmark of the Obama administration. It would have been one of the largest trade agreements in history, covering about 40 percent of the world’s economy and setting new terms and standards for trade for the United States and 11 other Pacific Rim nations. China was not included but would have been able to join.
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In their letter, the ambassadors warn that “walking away from TPP may be seen by future generations as the moment America chose to cede leadership to others in this part of the world and accept a diminished role.”“Such an outcome would be cause for celebration among those who favor ‘Asia for the Asians’ and state capitalism,” it added.
The Ambassadors were right. But domestic U.S. policies (and resistance to 'liberalization' from Asian countries) did not allow for such an agreement to happen:
The 2016 presidential race was shaped by anti-globalization trends. Donald J. Trump promised to destroy the pact if he became president. Hillary Clinton also denounced it, even though she supported a form of it as secretary of state.
Senator Mitch McConnell, Republican of Kentucky and the majority leader, said after the election in November that Congress would not take it up. That meant it was dead.
The RCEP is less controversial in Asia than the U.S. centric TPP would have been:
Unlike the TPP, or Trans-Pacific Partnership, and other U.S.-led trade deals, the RCEP doesn’t require its members to take steps to liberalize their economies and protect labor rights, environmental standards and intellectual property. U.S. Commerce Secretary Wilbur Ross has called it a “very low-grade treaty” that lacks the scope of the TPP. But RCEP’s imminent implementation illustrates America’s diminished clout and could make it harder for U.S. businesses to compete in the vast region.
While it has less regulations and 'liberalization' requirements than the U.S. had wanted to sneak into the TTP deal the RCEP is still comprehensive enough to have huge effects:
Malaysian Trade Minister Azmin Ali, who told reporters the deal would be signed on Sunday, called it the culmination of “eight years of negotiating with blood, sweat and tears.”
First proposed in 2011, RCEP will eliminate as much as 90 percent of the tariffs on imports between its signatories within 20 years, and the deal will come into effect by early as next year. It will also establish common rules for e-commerce, trade, and intellectual property.
“China has pulled off a diplomatic coup in dragging RCEP over the line,” Shaun Roache, Asia-Pacific chief economist at S&P Global Ratings, told Bloomberg. “While RCEP is shallow, at least compared to TPP, it is broad, covering many economies and goods, and this is a rarity in these more protectionist times.”
Asian countries will now preferably trade with other Asian countries and every non-Asian country will have to trade with them on only secondary terms.
Yet a news search finds that the upcoming RCEP signing only got a short mention on CNBC, one Bloomberg explainer and a short Reuters piece.
It seems that U.S. media are unhappy to report on such an immense victory for China and the demise of the U.S. position in the world.
Posted by b on November 14, 2020 at 17:21 UTC | Permalink
B - heard a bit about this trade deal this morning on, you know, the Beeb World Service and then a smaller hint on NPR - well, of course. It ain't TPP, is it?
Well, this is just the final hint that 2020 will go down in history as the moment when Asia (at least East Asia) took over the mantle of global leadership and became once again the place of most prosperous part of the world.
Though the West shouldn't freak out. First, Europe wasn't in a bad spot during the centuries when other centres were just as wealthy and advanced, or even more advanced - unless lunatics want to claim we had it awful and we weren't able to produce great art and intellectual achievements, when Athens, Rome or the Renaissance peaked. Then, it's quite possible to achieve a kind of multi-polar world with multiple prosperous spheres that aren't into open conflict with each other, but rather into some kind of cooperation.
Posted by: Clueless Joe | Nov 14 2020 17:37 utc | 2
It's true that the powers that be in the U.S. will not like the trade deal, but the American working class is not missing out on anything.
The economic value of international trade is questionable. Most countries, other than small islands, would be better off pursuing self-sufficiency.
B, how 'bout an update on the epidemic in Germany. Your country seemed to be doing well for a while but, like most of the West, seems to have lost the plot. I would like to hear your perspective on what Germany is doing wrong and what it should have done differently.
Posted by: Dan Lynch | Nov 14 2020 17:46 utc | 3
@1 Anne
Great post. I agree completely.
The only way through this mess is for the east to be the east and the west be the west. The world will be a much better place the more regions can exist without the need for stepping outside their own. If China spearheaded this, kudos to them. The whole point of the antiglobalist movement is regional diversity and localized control. I hope China realize the mistakes made by the globalists in their attempt to consolidate power towards unipolarity. If China is the usherer of multi-polarity as a historical movement in perpetuity, then they truly can be called a great global beacon in the effort to destroy globalism.
Posted by: NemesisCalling | Nov 14 2020 17:50 utc | 4
NemesisCalling @4 - So, so true. And my Ta to you! (As an English person of northern background - Ta is our common form of Thank you. And that's just a hint at the Yorkshire dialect....)
Posted by: Anne | Nov 14 2020 17:56 utc | 5
And NemesisCalling - How could, indeed, really, Should it be otherwise? The Hubris, Arrogance of the USA (and UK) that They should dictate how, what, Asian nations, countries, peoples act, accept, go along with...Incredible, but again, not really...how the western (especially Anglo-sphere) ruling elite mindset operates...
So - my mental fingers are crossed (and toes). We - in the west - need to be seriously, deeply reminded that our (so called) civilization (ho ho) is but at the level of kindergarten by comparison with the real civilizations of Asia (and West Asia).
Posted by: Anne | Nov 14 2020 18:02 utc | 6
The TPP was never going to work out. I remember when it was discussed, the American MSM stating it was being fast-tracked, that Obama would pass it etc. etc. But the truth was that the negotiations froze when Vietnam and Japan begun ask for "exceptions to the rule", i.e. certain sectors they knew they would be quickly dominated by the other they wanted to keep the tariffs.
Rule of the thumb is this: free trade zones between too divergent economies are doomed to fail. Just see the example of the Mercosur.
I don't think 2020 will be a hallmark year for the return of Asia. If we observe the world growth rates from half-century ago, we can clearly see that, since 1990, only Asia has truly grown (even if we exclude China - which is not capitalist - from the picture). The illusion Asia has not grown comes from Japan, which is essentially a Western Democracy and thus part of the Global North, therefore not a true Asian economy. Japan has been in pure stagnation and recession since that same year. The world is clearly Asian since the 1990s - it just took a little bit of time for the Western peoples to realize that on their skin (historical latency).
Another interesting aspect to take into account is that, contrary to Europe and Latin America, ASEAN always had a history of bilateralism and pragmatism in relation to the USA. Even nations built upon blatant anti-communism like Indonesia have always adopted a foreign policy of "using one superpower against the other to achieve true neutrality". That's why the USA wasn't able, for example, to throw Vietnam against China on the SCS imbroglio.
Last but not least, there's simply the objective reality: wealth is in China. The ASEAN economy that wants to prosper will have to give full priority to China. And the fact that China is right over there makes everything all the more natural and obvious.
Russia will have a decision to make: right now, for security and historical reasons, it gives full priority to its relations with Germany (its biggest importer). If it truly wants to consolidate itself as an Eurasian nation, it will have to give the due part of its attention and investments to Asia, China specially. Russia will only be able to ignore its Asian frontier for so long. What will Putin and his successors do?
Trump lost Asia? He is indeed a stable genius. But seriously, yes enough of this pre-apocalyptic, post-colonial entitlement and exceptionalism.
Posted by: gottlieb | Nov 14 2020 18:07 utc | 8
some reactions:
1. Seems like RCEP lays the groundwork for regional integration without the WTO, should it be necessary. This may be the case, if the US continues to sabotage the WTO, which would be driven by the US losing WTO judgments to do with the many "strategic" unilateral actions.
2. Besides India, Taiwan is also not participating - although like China, it already had bilateral free trade agreements with some RCEP countries, such as Taiwan-Japan or Taiwan-Korea, despite lacking formal diplomatic relations.
3. Another way to look at it is an attempt to construct an economic bloc to compete with EU, which is not entirely crazy if we take China, Japan, Korea, and ASEAN all together. To actually do this would involve integration of finance, requiring the most daunting compromises for the more powerful nations. But the tempting benefit is equivalent to the one in EU - namely to put a barrier in place to stop repeating a history of brutal conflict.
4. Lastly, as with the TPP, the details are murky, and the commercial motivations are suspect. The first issue with all of these FTA's is that they shift power away from national governments, in favor of international capital, and the second is that the wealthier participants get to have all kinds of exemptions, and can afford to exit the treaties or threaten to do so.
Posted by: ptb | Nov 14 2020 18:16 utc | 9
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"b" is Moon of Alabama's founding (and chief) editor. This site's purpose is to discuss politics, economics, philosophy and blogger Billmon's Whiskey Bar writings. Moon Of Alabama was opened as an independent, open forum for members of the Whiskey Bar community. Bernhard )"b") started and still runs the site. Once in a while you will also find posts and art from regular commentators. You can reach the current administrator of this site by emailing Bernhard at MoonofA@aol.com.
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I really, truly hope this deal works out for all the countries concerned: they are the regional countries, peoples, cultures, societies. WE ARE NOT. The South East Asian countries need, most definitely to be free of the shackles of western dominance, whoever of the UK/US/FR etc wields the whip. It is their region, their part of the world - NOT ours.
Posted by: Anne | Nov 14 2020 17:32 utc | 1