With Asean backing of RCEP, China takes geo-political lead in region

Sathish Govind

The resolute determination of the various Asean leaders calling for the swift conclusion of the Chinese-led Regional Comprehensive Economic Partnership (RCEP) by the end of the year suggests that China has taken the lead in geopolitical leadership in the region from the US.

The resolute determination of the various Asean leaders calling for the swift conclusion of the Chinese-led Regional Comprehensive Economic Partnership (RCEP) by the end of the year suggests that China has taken the lead in geopolitical leadership in the region from the US.

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While Asean has forged relations with the US for over 40 years, the US has not shown that it can be an economic, strategic partner to Asean. Under the presidency of Donald Trump, the US now looks at Asean as a strategic partner for political and regional security (military) purposes.

In addition, the US-Asean relationship took a further blow with the sudden withdrawal of the US from the Trans-Pacific Partnership (TPP) and the insular policies promoted by Trump since he ascended to power.

The trade pact includes Asean plus India, China, Japan, South Korea, Australia, and New Zealand, which collectively are responsible for a third of the world’s economic output.

The leaders of Asean countries appear to be of the opinion that in the wake of the current trade war between the US and China, RCEP will clearly articulate Asean’s stand to upholding the multilateral and global trading system.

Negotiations on the formation of RCEP had started since 2013 but reports say that India dragged its feet to lower rates of tariffs for fear of its market being flooded by Chinese goods.

But the RCEP is not moving because some negotiating countries are not confident with proposals to eliminate tariffs for a free flow of goods once the nations taking part in the negotiations seal the trade deal. India is one of the country’s having a bone of contention that may force further delays in its conclusion.

India’s trade deficit has given sleepless nights among many within the government and business sectors. In 2017-18, India exported goods worth $13.1 billion to China and imported goods worth $73.3 billion, creating a trade deficit of $63.1 billion. India has trade deficits with other RCEP nations, too, such as South Korea ($11.9 billion) and Australia ($10.2 billion).An influx of Indian goods would undermine India’s local market.

There is also the belief that China has manipulated laws to grant subsidies to its domestic manufacturers, despite being a member of the World Trade Organisation (WTO) for over 18 years.

China had instead floated an alternative idea that would leave India out of the picture and comprise only of Asean, China-Japan, and South Korea.

In 2016, the US under President Barack Obama’s leadership, Washington had a different view of Southeast Asia, saying it is a strategically important, economically dynamic region at the heart of the Asia-Pacific and is a central pillar of the US Rebalance to Asia.

Two years down the road, the US has shifted its policies towards the Asean. This has allowed China to step in as a potential replacement of the US on both the economic and security fronts.

For years, the Chinese-led RCEP was seen as a rival to the US-led TPP but the withdrawal of the US from the massive trade and investment deal in 2017 on account of US trade deficits has left Asean scrambling for a major economic partner.

The Asean head of states sees RCEP as a platform that would give the region’s economy the boost it badly needed.

But the path forward for the US in the region is, among others, to assert its leadership on all fronts. Asean needs a balancing of powers and should not let its centrality get compromised if the organisation is to completely shift its stance towards Beijing, two years after it pledged full support to the US to lead in the region.

The US must also reaffirm its commitment to Asean. While it has pulled out of the TPP, several leaders have pushed for TPP-II, which retains most of the earlier provisions without the US. US must now push for greater Asean-US initiatives that would see its commitment to trade, innovation or technology that would bolster both US and Asean interest.

Sathish Govind is an ex-analyst in a think tank in Malaysia
Contributing Writer, Capital Cambodia

 

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