Future of Economic Integration Bright, but U.S. Leadership Needed
WASHINGTON, D.C. - On Wednesday, June 15, the Asia Society Policy Institute (ASPI) convened a distinguished panel of experts from the recently established ASPI Trade Policy Commission to discuss economic integration in the Asia-Pacific. Panelists tackled three pressing issues: the prospects for conclusion of the Regional Comprehensive Economic Partnership (RCEP) negotiations, the future of the Trans-Pacific Partnership (TPP), and the importance of continued U.S. leadership.
RCEP
While it has become increasingly popular in recent months to portray RCEP as a China-led challenge to the U.S.-led TPP, panelists suggested that the two agreements could complement each other. Shotaro Oshima, the former Deputy Foreign Minister for Economic Affairs for Japan, said, “We need both TPP and RCEP …it's important to have RCEP concluded so there will be two types of mega-regional FTAs working towards eventual integration of the Asia-Pacific market.”
Mari Pangestu, Indonesia's former Minister of Trade, echoed this sentiment. “There are some views out there that [RCEP] is not ambitious enough, not deep enough … but it's an important beginning. It can be deepened [later if] they have a built in process to go further, which I think they will,” said Pangestu
Panelists agreed that when concluded, RCEP will likely fall short of being an ideal arrangement. Even so, Wang Yong, Professor at the Peking University School of International Studies, noted it could serve a valuable role in unifying the “spaghetti bowl” of Free Trade Agreements (FTAs) in the region.
TPP
Underscoring the broad appeal of TPP, panelists from non-member countries expressed optimism regarding eventual accession. Choi Seokyoung, former Ambassador of South Korea to the World Trade Organization (WTO), believes that accession to TPP would be relatively easier for South Korea due to its existing FTAs with the majority of TPP members.
Former Trade Secretary of the Philippines Gregory Domingo declined to speculate on incoming President Rodrigo Duterte’s view on TPP, but indicated that the administration would have reason to look upon it favorably. “Our studies indicate [TPP would be] a net benefit to the Philippines, and I am sure [the new administration] will be looking at those same studies,” Domingo suggested.
Discussing China’s interest in TPP, Wang held that in the near to medium-term it would be quite difficult for China to meet the requirements necessary to join. He added that it would be in Beijing’s interest in the long-term, especially as it looked to reform state owned portions of the economy.
In looking towards ratification, Peter Grey, former Ambassador of Australia to the WTO, and Oshima noted that TPP is being deliberated in their respective legislatures and were optimistic about approval in the coming months.
U.S. Leadership
Discussion also touched on the growing anti-trade sentiment in the U.S. While trade policy plays a significant role in the current presidential election, speculation remains as to whether TPP could be renegotiated. Panelists expressed grave concerns with this option, suggesting that re-opening negotiations would strain bilateral relations between the U.S. and TPP member countries.
Grey summarized the panel’s view. “Reopening a closed, signed-off agreement which has already been submitted to your national parliament is an extremely big ask,” said Grey.
Panelists agreed the U.S. should consider the repercussions of stepping back from the trade sphere. “There's a sense that … if the U.S. steps back from these trade issues that the world will stop along with them. That, unfortunately, is not the case. These other regional trade arrangements, like RCEP, will continue. U.S. leadership will simply be absent,” he said.
Pangestu added, “If the U.S. is going to disengage from the world… that sends a very bad signal for U.S. credibility in the region. If that is lost then the anti-trade, protectionist sentiments will increase in our part of the world…That clear and present danger is actually scary,” she said.
On the other hand, Domingo noted that the growing anti-trade sentiment is not unique to the U.S. “It's actually prevalent in many parts of the world,” he stated, also noting that anti-trade rhetoric typically calms once presidential campaigns conclude.
Listen to the full panel discussion using the audio player below.