RCEP puts Malaysia on par with super economies

Azmin showing the RCEP agreement document during the signing ceremony witnessed by Muhyiddin on Nov 15. – fotoBERNAMA\

 ON behalf of the Government of Malaysia, I signed the historic Regional Comprehensive Economic Partnership (RCEP) agreement together with 14 other RCEP participating countries (RPCs).

Being an integral part of the week-long 37th Asean Summit, led by Prime Minister Tan Sri Muhyiddin Yassin, the signing of the RCEP agreement represents the high point of the summit which was convened virtually in its entirety.

Witnessing this momentous occasion, the prime minister said that the signing signifies to the world that Asean, with its five Free Trade Agreement (FTA) partners, places utmost priority on regional economic integration that facilitates cross-border trade, investments and the easing of non-tariff measures.

The signing is the culmination of eight years of arduous and protracted negotiations involving 31 rounds of negotiations, eight ministerial meetings and four summits.

Undoubtedly, it represents a significant and imperative milestone in the integration and revitalisation of economies of the 15 parties.

Further, this will also be a testament to the strengthening of the multilateral trading system as well as upholding the development agenda in the WTO.

Being the largest FTA in the world, covering 15 countries with 2.2 billion people or nearly a third (29.7%) of the world’s population, RCEP represents US$24.8bil or almost a third (28.9%) of the world’s GDP based on World Bank’s 2018 data.

With different economic development levels of all parties, RCEP will contribute to sustaining Malaysia as a preferred trading hub and investment destination.

To Malaysian businesses, it will mean tariff elimination and reduction for merchandise goods, including the facilitation of export and import of goods among the RCEP countries.

Service providers including e-commerce will be able to enjoy greater market access in terms of cross-border supply and establishing commercial presence in the RCEP markets.

In addition, RCEP will promote, facilitate and protect the investment climate of participating countries within the region. This also includes information exchange and promotion of transparency measures to facilitate business and investment within the RCEP area.

Realising that SMEs play a pivotal role to the backbone of every economies, RCEP could provide a level playing field between developed and least developed countries.

There is a specific chapter on SMEs providing provisions for information exchange and promotion of transparency measures to facilitate business and investment within the region, including providing economic and technical cooperation especially to SMEs.

RCEP can be an economic recovery tool against Covid-19 which will help to ensure opening of markets as well as uninterrupted supply chain.

The RCEP amalgamates and streamlines the existing Asean Plus One FTAs involving Japan, South Korea, China, Australia and New Zealand into an inclusive and comprehensive agreement that will enhance inter and intra-regional trade and investment, strengthen regional value chains, as well as facilitate transparency, information sharing and harmonisation of technical regulations and standards.

RCEP reflects our strong commitment for international trade, connectivity, rules-based multilateral trading system and enhancing free flow of trade and investment.

Datuk Seri Mohamed Azmin Ali Senior Minister Minister of International Trade and Industry

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China and 14 other economies signed the world's largest trade deal, the Regional Comprehensive Economic Partnership (RCEP), on Sunday to form a free trade zone in the Asia-Pacific region that will encompass a third of the global economy, in what Chinese officials and experts call a historic win for multilateralism that would help the regional and global economies cope with the COVID-19 pandemic and rising protectionism.

Chinese Premier Li Keqiang said that signing of the RCEP is not only an achievement of landmark significance in East Asian regional cooperation, but is also a victory of multilateralism and free trade.

"Signed after eight years of negotiation, the RCEP lets people see brightness and hope in shadows, proving that multilateralism and free trade remain the main and correct course as well as the right direction for the global economy and mankind," Li said.

Signed at a critical turning point in the global political climate – when the next US administration is set to come into office and the world is grasping for solutions to tackle challenges arising from the coronavirus pandemic, the new regional deal would also help the Asia Pacific region take the global lead in recovering from the COVID-19 pandemic and reduce US hegemony in the region, experts said.

The deal, which encompasses Japan, China, South Korea, Australia and the 10 members of the Association of Southeast Asian Nationals, will create what is believed to be the world's largest free trade zone, covering about one-third of the world's total population and GDP. It will be also Japan's first free trade framework with its vital trading partners China and South Korea.

Notably, two major economies – the US and India – were left out of the trade pact. The US, under President Donald Trump, has been pushing for bilateral deals rather than multilateral ones. India was part of the negotiations, but did not join the final agreement.

The RCEP, which contains 20 chapters covering a wide range of areas from merchandise trade to investment to e-commerce, is “modern, comprehensive and high-level win-win agreement,” China’s Finance Ministry said on Sunday, adding that under the deal, members will aim to reduce tariffs to zero in the coming decade.

Bao Jianyun, professor of the School of International Studies and director of the Center for International Political Economy Studies at Renmin University of China, said that signing of the RCEP showed China, which played a very active role in pushing for the deal, has led the way in liberalizing trade and promoting a global market order of free competition.

"At the same time, China provides the world with a Chinese model and a Chinese solution on the open platform, where it serves the world," Bao told the Global Times, explaining that China as an emerging power has been a major promoter of trade and investment integration of RCEP.

Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations, also stressed that the successful and long-awaited signing of the megapact has rekindled the world's 'hope and confidence" about a model of cooperation.

"Global cooperation has been defeated in recent years because of rising protectionism and China-US trade friction. But the RCEP's signing is a signal that cooperation does work today, which I think is even more important withthe lift it gives to specific countries' GDP growth," Chen told the Global Times.

Liu Kuikui, a Beijing-based consultant of international transport and trade, told the Global Times that the RCEP will establish a common framework of rules of origin for Asia-Pacific countries, reduce investment barriers, and expand trade and investment. The participation of Japan, South Korea, Australia and New Zealand, allies of the US, demonstrates that the four countries are opposed to the trade protectionism and the economic bullying launched by the US.

Signing of RCEP a victory of multilateralism and free trade: Chinese Premier Li Keqiang RCEP will end US hegemony in West Pacific Not joining RCEP a strategic blunder that will lead to India’s isolation in globalization 

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Western dominance on the global stage coming to an end, entering the era of Chinese influence

China’s President Xi Jinping speaking at the World Economic Forum AP

https://youtu.be/dOrQOyAPUi4

Western dominance on the global stage is coming to an end – we are now entering the era of Chinese influence

China’s economic relations with the Middle East are on a long-term upward trend. Beijing is the region’s largest foreign business partner, now surpassing the US in oil purchases. In the five years leading up to 2009 trade tripled, reaching $115bn

Donald Trump’s inauguration has been described as symbolising the end of the “American Century”. Historians may look back on 2016-17 as the years in which the two greatest forces sweeping the world – the anti-establishment backlash in the West, and the resurgence of Asia – combined to thrust China into a global leadership role. This was seen at Davos, in Beijing’s recent foray into the world’s most contentious conflict – Israel-Palestine – and most recently in Theresa May’s statement that the US and UK will never again invade sovereign countries to “remake the world in their own image”. This suggests that it might not be just a century of American dominance that’s ending, but half a millennia of Western pre-eminence.

President Xi Jinping’s call for the establishment of a Palestinian state with East Jerusalem as its capital occurred just as the Trump White House began early talks over moving America’s embassy in Israel to the disputed city. This is part of China’s conversion of economic weight into diplomatic and geopolitical assertiveness in the Middle East over the last few years.

China’s economic relations with the region are on a long-term upward trend. Beijing is the region’s largest foreign business partner, now surpassing the US in oil purchases. In the five years leading up to 2009 trade tripled, reaching $115bn.

China has begun translating this into strategic influence. In 2008-2009, Beijing sent naval vessels to the region, an action referred to as its “biggest naval expedition since the 15th century”. China has embarked on strategic partnerships with traditional US allies like Saudi Arabia and Qatar. In addition to Saudi Arabia traditionally being China’s top source of oil, Beijing has convinced Riyadh to engage its “One Belt, One Road” initiative and attracted it to join the Asian Infrastructure Investment Bank. In 2016, the two countries unveiled a five-year plan for Saudi Arabia-China security cooperation. Riyadh also expressed interest in Chinese defence technology.

China’s growing footprint is in part possible due to some of the forces that brought President Trump and Prime Minister May to power. Firstly, Western publics are beyond fatigued by over a decade of war and intervention in the Middle East – much of which was supported by the same Republicans within Washington’s foreign policy establishment that had declared they wouldn’t work with Trump, and the same Labour MPs who sought to overthrow Jeremy Corbyn. Despite Trump’s tough-on-terror talk, the public gravitated to the same anti-regime change positions that were popular with Bernie Sanders supporters. May herself has observed this mood and adjusted her position accordingly. This is combined with a reduction of the US and Britain’s relative power in the region.

Additionally, Washington is less dependent on energy from the region. This is combined with Middle Eastern states themselves reaching out to diversify their strategic partnerships in an increasingly multipolar world. This includes US allies like the Gulf States, as well as those who feel threatened by the West, like Iran.

Beijing's Trump Cards

China has several advantages in the region. Firstly, Beijing mirrors Western public opinion by taking a non-interventionist approach to issues like democracy and human rights. This of course sits well with rulers in the Middle East. China has asserted its view that Middle Eastern countries and their people should be able to decide their own path to development in accordance with “national conditions”. In the past, President Xi has expressed China’s support for Saudi Arabia choosing its own development path. In Qatar, Beijing differentiated itself from the West, pledging to support Doha on issues of national independence, sovereignty, stability, security and territorial integrity. This was received well during a visit to Beijing by Qatar’s Emir who reportedly voiced his “appreciation for China’s impartial stand on international affairs”.

Secondly, unlike the US, China is not bound by well-known and entrenched alliances and animosities. It is obvious who the US supports in the Middle East and who its rivals are. With Beijing there is more flexibility. Shrewd foreign policy advisors in Beijing will be advising President Xi to use China’s burgeoning ties with the Gulf States and Israel to leverage relations with Iran and vice versa.

For instance, China has held positions on Syria and Libya inimical to those of its new partners in the Gulf. In addition to Damascus being a long-time buyer of weapons from China, Beijing has also made clear its support for Moscow’s intervention. China and Russia have consistently worked together to provide diplomatic protection to the Syrian government via vetoes at the UN. Some sources also reported Chinese military advisers being dispatched to Syria and Beijing providing training support to the Syrian army.

While maintaining its tendency to take a soft-spoken approach, Beijing hosted both senior Assad government and opposition figures. In a purposely symbolic move, during the China visit, the Syrian Foreign Minister confirmed the government’s willingness to participate in the peace process. Beyond Middle Eastern states, China’s position on Syria provides it negotiating power with both the West and Russia. Similarly, Beijing’s Palestine announcement allows it to extract more from Israel.

China’s Interests

China primarily sees the region as a source of energy. It is also a continuation of the trade routes it seeks to secure from East Asia, through the Indian Ocean, to the Middle East, Africa and Europe.

The ability to influence the Middle East is also important to great/rising powers like America, China and India in order to disrupt and deny energy to potential adversaries. Greater Chinese involvement will give Beijing some potential leverage over the energy supplies of adversaries like Japan, and potential competitors like India. Beijing’s pursuit of closer ties with Middle Eastern states as part of its “Maritime Silk Road” initiative adds to India’s fears of encirclement by a Chinese “string of pearls”.

Beijing also prioritises stability in the region more consistently than Washington. Recent conflicts cost China. The toppling of Gaddafi in Libya led to losses in energy investments, infrastructure and equipment, as well as evacuation costs. With regard to Syria, Beijing had to abandon its oil investments in 2013 due to the war.

As one of the main theatres for geopolitical competition between great powers, China’s growing strategic role in the Middle East is another step toward what many in the country see as its own “manifest destiny”. This rising Asian power, free of colonial baggage in the region, adds a new ingredient that could help untangle seemingly intractable issues like Israel-Palestine. Furthermore, with its steadfast principle of respecting sovereignty, China’s increasingly loud and distinctive voice in the Middle East may indeed be the final nail in the coffin of Western interventionism.

Sources: Dr Kadira Pethiyagoda is a visiting fellow with the Brookings Institution researching Asia-Middle East relations - independent.co.uk

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‘Free trade’ in trouble in the United States

 

  The United States

  Current Bilateral/Multilateral FTA's

  Proposed/Suspended Bilateral/Multilateral FTA's

https://en.wikipedia.org/wiki/United_States_free_trade_agreements

As free trade reaches a crossroads in the US, developing countries have to rethink their own trade realities for their own development interests.

“FREE trade” seems to be in deep trouble in the United States, with serious implications for the rest of the world.

Opposition to free trade or trade agreements emerged as a big theme among the leading American presidential candidates.

Donald Trump attacked cheap imports especially from China and threatened to raise tariffs. Hillary Clinton criticised the Trans-Pacific Partnership Agreement (TPPA) which she once championed, and Bernie Sanders’ opposition to free trade agreements (FTAs) helped him win in many states before the New York primary.

That trade became such a hot topic in the campaigns reflects a strong anti-free trade sentiment on the ground.

Almost six million jobs were lost in the US manufacturing sector from 1999 to 2011.

Wages have remained stagnant while the incomes of the top one per cent of Americans have shot up.

Rightly or wrongly, many Americans blame these problems on US trade policy and FTAs.

The downside of trade agreements have been highlighted by economists like Joseph Stiglitz and by unions and NGOs. But the benefits of “free trade” have been touted by almost all mainstream economists and journalists.

Recently, however, the establishment media have published many articles on the collapse of popular support for free trade in the US:

> Lawrence Summers, former Treasury secretary, noted that “a revolt against global integration is under way in the West”. The main reason is a sense “that it is a project carried out by elites for elites with little consideration for the interests of ordinary people”.

> The Economist, with a cover sub-titled “America turns against free trade”, lamented how mainstream politicians are pouring fuel on the anti-free trade fire. While maintaining that free trade still deserves full support, it cites studies showing that the losses from free trade are more concentrated and longer-lasting than had been assumed.

> Financial Times columnist Phillip Steven’s article “US politics is closing the door on free trade” quotes Washington observers saying that there is no chance of the next president or Congress, of whatever colour, backing the TPPA. The backlash against free trade is deep as the middle classes have seen scant evidence of the gains once promised for past trade deals.

> In a blog on the Wall Street Journal, Greg Ip’s article The Case for Free Trade is Weaker Than You Think concludes that if workers lose their jobs to imports and central banks can’t bolster domestic spending enough to re-employ them, a country may be worse off and keeping imports out can make it better off.

Orthodox economists argue that free trade is beneficial because consumers enjoy cheaper goods. They recognise that companies that can’t compete with imports close and workers get retrenched. But they assume that there will be new businesses generated by exports and the retrenched workers will shift there, so that overall there will be higher productivity and no net job loss.

However, new research, some of which is cited by the articles above, shows that this positive adjustment can take longer than anticipated or may not take place at all.

Thus, trade liberalisation can cause net losses under certain conditions. The gains from having cheaper goods and more exports could be more than offset by loss of local businesses, job retrenchments and stagnant wages.

There are serious implications of this shift against free trade in the US.

The TPPA may be threatened as Congress approval is required and this is now less likely to happen during Obama’s term.

Under a new president and Congress, it is not clear there will be enough support.

If the US does not ratify the TPPA, the whole deal may be off as the other countries do not see the point of joining without the US.

US scepticism on the benefits of free trade has also now affected the multilateral arena. At the World Trade Organisation, the US is now refusing attempts to complete the Doha Round.

More US protectionism is now likely. Trump has threatened to slap high tariffs on Chinese goods. Even if this crude method is not used, the US can increasingly use less direct methods such as anti-dumping actions. Affected countries will then retaliate, resulting in a spiral.

This turn of events is ironic.

For decades, the West has put high pressure on developing countries, even the poorest among them, to liberalise their trade.

A few countries, mainly Asian, staged their liberalisation carefully and benefited from industrialised exports which could pay for their increased imports.

However, countries with a weak capacity, especially in Africa, saw the collapse of their industries and farms as cheap imports replaced local products.

Many development-oriented economists and groups were right to caution poorer countries against sudden import liberalisation and pointed to the fallacy of the theory that free trade is always good, but the damage was already done.

Ironically, it is now the US establishment that is facing people’s opposition to the free trade logic.

It should be noted that the developed countries have not really practised free trade. Their high-cost agriculture sector is kept afloat by extremely high subsidies, which enable them to keep out imports and, worse, to sell their subsidised farm products to the rest of the world at artificially low prices.

Eliminating these subsidies or reducing them sharply was the top priority at the WTO’s Doha Agenda. But this is being jettisoned by the insistence of developed countries that the Doha Round is dead.

In the bilateral and plurilateral FTAs like the TPPA, the US and Europe have also kept the agriculture subsidy issue off the table.

Thus, the developed countries succeeded in maintaining trade rules that allow them to continue their protectionist practices.

Finally, if the US itself is having growing doubts about the benefits of “free trade”, less powerful countries should have a more realistic assessment of trade liberalisation.

As free trade and trade policy reaches a crossroads in the US and the rest of the West, developing countries have to rethink their own trade realities and make their own trade policies for their own development interests.


By Martin Khor

Martin Khor (director@southcentre.org) is executive director of the South Centre. The views expressed here are entirely his own.

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