China has inked a trade agreement with 14 other countries, hailing the move as a “victory for multilateralism and free trade.”
Fifteen nations signed up for the Regional Comprehensive Economic Partnership (RCEP) at a livestreamed ceremony in Hanoi on Sunday, in a landmark deal that will open up trade in goods, services, and investments among member states, official state media reported.
“The signing of the RCEP is not only a monumental achievement in East Asian regional cooperation, but more important, a victory of multilateralism and free trade,” Chinese premier Li Keqiang told the online meeting.
Li said the deal would boost regional economies in the wake of the coronavirus pandemic and drive global economic growth, state news agency Xinhua reported.
“The signing of the RCEP shines light and hope through dark clouds under the current international situation, showing that multilateralism and free trade are the right way forward, and remain the right direction for promoting the growth of the world economy and the progress of humanity,” Xinhua quoted Li as saying.
The pact includes ASEAN members Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, along with China, Australia, Japan, New Zealand, and South Korea.
Analysts said the long-negotiated deal was conceived in response to the U.S.’ Trans-Pacific Partnership (TTP) signed under President Obama, although the U.S. later withdrew from the agreement under the Trump administration.
Ding Shu-Fan, honorary professor at Taiwan’s National Chengchi University, said the Chinese Communist Party will be looking for ways to counter U.S. power in the Asia-Pacific.
“China’s economic and trade ties with the region will get closer and closer, and Beijing will also be able to exert more influence on those countries via trade,” Ding told RFA.
“Other countries may need the U.S. to balance [Chinese military power] in the South China Sea, but as China’s influence grows, other countries could start to lower their expectations of the U.S., which may lead to policy changes,” Ding said.
Waning power in the region
Hui Ching, research director at the Hong Kong Zhi Ming Institute, said the deal comes at a time when U.S. economic power was already on the wane in the region.
“Before the 1980s … the U.S. was an important market for a lot of these countries,” Hui said. “They may also have imported electronic components from the U.S.”
“But nowadays, I don’t really see any dependence on the U.S. market among these countries,” he said. “This is a trade agreement, so I don’t think we can really look at it from a political or security angle.”
He said the main interest lies with the inclusion of economies that are considered “Western,” including Japan, South Korea, New Zealand, and Australia.
“These are very important regional economies,” Hui said. “Are these countries now likely to reject U.S. interests in order to accommodate China?”
Hong Kong current affairs commentator Johnny Lau said Japan and South Korea were highly unlikely to place economic ties with China above diplomatic and military ties with the U.S., however.
On the democratic island of Taiwan, which has been excluded from the RECP deal for refusing to accept Beijing’s claim of sovereignty over its 23 million people, officials said they would focus instead on developing competitiveness.
“Political factors make it difficult for Taiwan to join international organizations, so we should think about how to improve our competitiveness,” economics minister Wang Mei-hua told reporters in Taipei on Monday, in response to the inking of the deal.
He told lawmakers shortly afterwards that the island’s exclusion from RECP hadn’t been a failure for the administration of President Tsai Ing-wen.
“This is not a failure,” Wang said. “All members states had to agree to China’s [intention to rule Taiwan] … under ‘one country, two systems’.”
“China would definitely have required that Taiwan sign up to [this], and how would that be acceptable to our people?” he said.
Need to rethink
Ruling Democratic Progressive Party (DPP) lawmaker Chen Ting-fei said the government would need to rethink its current trade policy, given that many of Taiwan’s key trading partners are now in the RECP agreement.
“We have been promoting this ‘go south’ trade policy this whole time, but we can’t become part of this regional integration, and we can’t join the TPP either,” Chen said. “So what exactly are we going to upgrade?”
Opposition Kuomintang (KMT) legislator Chen Yi-hsin told the Legislative Yuan that U.S.$54.8 billion worth of Taiwanese products could be threatened by the deal, which offers low or zero tariffs in sectors they need to compete in.
Taiwan has never been ruled by the Chinese Communist Party (CCP) nor ever formed part of the People’s Republic of China.
But under CCP general secretary Xi Jinping, Beijing has stepped up its claims on the island, and has refused to rule out a military invasion of Taiwan, which is ruled by the 1911 Republic of China founded by Sun Yat-sen at the fall of the Qing Dynasty.
President Tsai has repeatedly said that the country’s 23 million people have no wish to give up their sovereignty or democratic way of life, and has refused to enter talks with Beijing until Taiwan is treated as a diplomatic equal.
China has imposed sanctions on U.S. companies selling weapons to Taiwan, and repeatedly flies fighter jets into Taiwan’s airspace during key events like elections, or visits by senior U.S. officials.
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