The start of a piece in yesterday’s TheStreet summarized a common viewpoint on the US withdrawal from the Trans-Pacific Partnership (TPP) trade agreement, when it said: “You can’t lose what you never had…” In fact, you can. It is becoming increasingly obvious that American companies are losing ground. The damage is two-fold—the United States has chosen to sit out from the TPP and it is also not benefiting from the range of trade deals that crisscross Asia, giving preferences to competitors in the region in key markets. Adam Behsudi nicely showed this week in Politico how international trade agreements are directly affecting farmers from one county in Iowa.
Living with American Uncertainty
The NAFTA negotiations have implications for Canada beyond simply the talks in Washington. If the United States is no longer a reliable partner, then Canada needs to start thinking about a different approach. It needs to think about this now and it needs to do so quickly. Canadian officials appear to have adopted a similar strategy to many other countries. First, they have tried to figure out what the US is likely to want. They have dispatched various delegations to DC to have conversations with the President and others. Second, they have started discussions with other countries. For Canada, this means starting negotiations with China on a free trade agreement. These talks will likely take time to conclude, hence the urgency in beginning now.
Solving the Many Sides of RCEP
Since work is likely to continue towards solving the final row of the puzzle later, what matters is locking in progress in cracking most of the solution. Getting the final row done feels very satisfying, but more critical is working out how to get the lion’s share of the rows into place. This is true, even if it turns out that the final rows can’t be slotted into place using the existing directions for solving the puzzle. It will still push forward trade across Asia in ways that have not been tried in the region before and deliver economic benefits to companies and consumers. Getting to the end, however, remains a challenging goal. Solving a “normal” Rubik’s cube with four sides is hard enough. Completing one with 16 sides is testing the patience and negotiating skills of everyone involved.
RCEP: Looking Ahead to 2017
RCEP has therefore been negotiating with an unusual approach. First, the ten countries of ASEAN meet to determine their position in any given chapter. Sometimes, the ASEAN Foreign Partners (AFPs) also caucus. Then, all 16 parties come together to talk. This multi-stage approach has helped keep ASEAN “in the driver’s seat” in RCEP thus far. But heading into 2017, with the hope that only four rounds remain, a few things suggest that RCEP will have to reconsider its strategy and approach if members intend to reach a satisfactory conclusion. There are, fortunately, a number of trends that suggest that pressures are building to drive various member states to be more ambitious and aggressive.
RCEP and TPP Compared
This post is a comprehensive overview of the different provisions in the Regional Comprehensive Economic Partnership (RCEP) and the Trans-Pacific Partnership (TPP) trade agreements to allow a side-by-side comparison of the two deals. Of course, since the RCEP negotiations are not yet finished and officials are meeting next week for the 16th round, the situation in Asia may still change.