Conclusion of TPP and RCEP Seems to Take More Time

It is predicted that both the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP) will not become effective within this year. Under the circumstances, the heads of the 16 states participating in the negotiations for the establishment of the RCEP adopted a joint statement on September 8 for a smooth progress of their talks.

The RCEP, a free trade agreement (FTA) led by China, takes up a significant portion of the global economy. Specifically, the total population of the countries taking part in it is equivalent to 50% of the population of the world. When it comes to GDP, the RCEP amounts to US$22.4 trillion, US$5 trillion less than that of the U.S.-led TPP. Still, the negotiations are currently in a stalemate with the different levels of economic growth of the participating countries having resulted in disputes over the degrees of commodity, service and investment market opening. According to the joint statement, those countries are to try to achieve a substantial progress via their official negotiations scheduled for next month in China and December in Indonesia.

In the meantime, the Barack Obama administration is working on the TPP as a part of its Pivot-to-Asia policy. At present, however, both Donald Trump and Hillary Clinton as well as the Democratic and Republican parties are opposed to the TPP with the presidential election around the corner, meaning ratification by the Congress is rather unlikely.

China is fostering the RCEP as an economic bloc that is capable of responding to the expansion of power of the United States in Asia. The other intentions of China related to that FTA include mending of its relations with those Asian countries involved in territorial disputes with itself.

It seems that any further delay in the conclusion of the TPP will lead to the RCEP being opted for by the countries concerned as a temporary alternative. However, the problem is that the RCEP is unlikely to reach an agreement in the near future as well with the participants’ political interests complexly intertwined as in the case of the TPP. Countries interested in both of the FTAs are currently rather passive in terms of the conclusion of the agreements, busy feeling out the superpowers.