In Asia, China steps in as U.S. role eclipses
The East Asian countries ushered in the new year of 2021 with subdued optimism. The geopolitical landscape has changed with China as the driving economic and political power, and the clout of the United States receding into sunset. Such eclipse of American power is a self-inflicted wound left by the impetuous president Trump’s erratic policies that Biden, the present president finds hard to reverse. The wind is clearly blowing in China’s favour.
Central to this issue of the decline in U.S. power is the RCEP (Regional Comprehensive Economic Partnership). RCEP has 15 countries as its member, leading among them are the United States, China, Japan, South Korea, and Australia. Although signed in November 15, 2020, the treaty became effective on January 1, 20w22. Some countries mostly smaller in size, are members of both the ASEAN (Association of South East Asian Nations), and the RCEP. These countries have been wary of a possible military stand off between the two mighty powers, the U.S., and China. The fallout of such a conflict could be devastating for them, both on the trade and military front. So, they had wanted to hem in China into the RCEP where the U.S. and other democracies like South Korea and Japan hold considerable sway. Trade contacts invariably lessen military tension.
According to data by the World Bank, the agreement would cover 2.3 billion people or 30% of the world’s population, contribute US$ 25.8 trillion about 30% of global GDP, and account for US$ 12.7 trillion, over a quarter of global trade in goods and services, and 31% of global FDI inflows. According to RCEP terms, all import barriers among member nations will be progressively lowered to zero level in a span of 20 years. Apart from this, the members will have a common platform for Intellectual Property Rights and e-commerce. In trying to accommodate China’s strident demands, the member nations had to bend backwards, and dilute the original strict conditions stipulated in the draft. As far as labour and environmental standards, the RCEP agreement pays only lip service, as its terms are too lenient to be treated as a high-quality treaty by U.S. establishment. Analysts in Brooklyn Institute feel that RCEP will contribute a meagre addition of just $500 billion to global trade by 2030. In contrast, the world trade in the pre-pandemic year 2019 had touched $19 trillion.
In respect of geopolitical significance, however, the RCEP has undeniable impact. With the U.S. abandoning its role as the ‘mover and shaker’ in the world stage, other nations find it easy to wrest control from it, and shape new treaties in their ways. President Obama had this in mind when he floated the idea of a 12-nation Trans Pacific Partnership. This grouping was to exclude China and include countries like Canada, Mexico, Chile and Peru. The proposal had the support of both the Democrats and Republicans.
Mr. Trump, always eager to portray himself as the sole protector of U.S. interests, botched the initiative by pulling out the U.S. from such a partnership. Instead, he triggered a unilateral trade war against China that had wide ramifications. Trump renegotiated the U.S.-South Korea deal and imposed selective tariffs on Japan, its closest ally in Asia. Using this as a bargaining chip, Trump got more access to Japan’s agricultural market. In return, he reduced U.S. import tariffs on Japanese goods. And the Biden administration, bowing to some of the same industries and unions that supported Mr. Trump’s policy, has declined to resurrect the TPP.
The RCEP is just one instance of what happens when the U.S. abdicates its role as the ‘deal-maker’. The terms of the RCEP tilt in favour of China at the cost of the U.S. Now, the incumbent president, Joe Biden, has to wrestle back the initiative China has seized. This is why, Biden has been belligerent in his policy to China, but to rein an emboldened China is going to be tough for Biden.