Fifteen Asian-Pacific countries signed a massive trade deal that brings together China, Japan, and South Korea together as trading partners for the first time. The agreement, signed Nov. 15, is one of the largest regional free trade agreements ever penned.
The Regional Comprehensive Economic Partnership excludes the United States and India in a move that some say strengthens China’s global trade standing. Analysts say the deal also expands the China’s ability to buy agricultural commodities from places besides the U.S.
Responding to the new deal likely isn’t a high priority for the incoming Biden administration. But pressure could eventually mount for the White House to counteract any narrative that China is becoming the world’s foremost trade superpower.
“I think this definitely should trigger more discussions and nudges for the future Biden administration to consider rejoining [the Trans-Pacific Partnership] and accelerating negotiations with Europe,” said Wendong Zhang, an economics professor at Iowa State University.
President-elect Joe Biden has not committed to rejoining the contentious deal, which some criticized for disenfranchising American workers. Zhang says the TPP is an overall higher quality deal while the RECP is broader.
“The TPP requires that about 95 to 99% of the goods will have no tariffs, and this one has 90%,” he said.
The deal also offers looser environmental and labor expectations. NPR reported this week that President Biden pledged to negotiate any U.S. trade agreement with input from environmental and labor experts.
Zhang says RCEP also sends the message that China could be looking to take more of its agricultural business elsewhere in the future.
“There will be a lot more incentive for China to further diversify away from the United States, especially when it comes to some of [agricultural] commodities.”
For example, he says the deal makes it easier for China to buy more dairy from Australia and New Zealand. While he doesn’t expect that to make a huge difference — the countries already have a trade agreement — the agreement points to more regional investment going forward, including in the agricultural sector.
“There are also discussions in the Chinese media, talking about an even higher standard agreement between Japan, South Korea and China,” Zhang said.
“So, I think in some ways, it shows the world of deglobalization … and there are strong commitments, especially among Asian countries, to keep pushing forward for better integration.”
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