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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
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THE RCEP HAS ALREADY COME INTO FORCE:
Some reasons to closely monitor its future development.


by Félix Peña
January 2022

English translation: Isabel Romero Carranza


 

The entry into force of the Regional Comprehensive Economic Partnership (RCEP), on January 1, 2022, between ten ASEAN countries (Burma, Brunei, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, Vietnam) and five countries of the Asia Pacific region (China, Japan, South Korea, Australia, New Zealand), has opened a new stage in geopolitics and in the architecture of regional trade alliances.

The RCEP represents a market of 2.3 billion people, with a growing percentage of urban middle class consumers and 30% of world trade and GDP.

Originally an initiative of the ASEAN countries and China, it links countries between which different modalities of preferential trade agreements already exist. Its architecture does not explicitly reflect any pre-existing model, but conforms to the requirements of the multilateral trading system embodied in the WTO.

The RCEP introduces novel elements into the architecture of preferential trade agreements. It tends to facilitate regional value chains, especially with its provisions on rules of origin.

The entry into force of the RCEP highlights the need to deepen the analysis in our region on how to place the agenda of Latin American integration in the perspective of the new realities that are emerging in the functioning of the international trade system. As we have pointed out on previous occasions, it makes the need to reinforce the role of ALADI even more topícal.


In our December 2020 newsletter, we had already pointed out that the signing, in November 2020, of the RCEP (Regional Comprehensive Economic Partnership) between ten ASEAN countries (Burma, Brunei, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, Vietnam) and five countries of the Asia Pacific region (China, Japan, South Korea, Australia, New Zealand and South Korea) has opened a new stage in geopolitics and in the architecture of regional trade alliances.

This has been confirmed by the entry into force of the RCEP on January 1, 2022, following its ratification by eleven member countries, of which Australia, China, Japan and South Korea, are worth noting due to their economic significance. In this regard, it should be mentioned that India decided not to sign the agreement, although it remains open to future participation.

As we previously mentioned in our newsletter, the RCEP represents a market of 2.3 billion people, with a growing percentage of urban middle class consumers and 30% of world trade and GDP. It was originally an initiative of the ASEAN countries and China, and links countries among which there are already different modalities of preferential trade agreements. Its architecture does not explicitly reflect any pre-existing model, but all indicates that it conforms to the requirements of the multilateral trading system embodied in the WTO.

Article 20.9 of the RCEP Agreement refers to the possibility of access by other States in the following terms: "This Agreement shall be open for accession by any State or separate customs territory 18 months after the date of entry into force of this Agreement". And later adds "Such accession shall be subject to the consent of the Parties and any terms or conditions that may be agreed between the Parties and the State or separate customs territory". As we said in our December 2020 newsletter, it does not specify whether or not new partners should belong to the Asia-Pacific region, nor does it explicitly exclude it. However, It specifies that it must be accepted by all RCEP member countries.

The negotiation of the RCEP began in 2012, when the other major preferential trade agreement in the Asia-Pacific region, the Trans-Pacific Partnership (TPP)-from which the US withdrew when Donald Trump became President in 2017-was still being considered a fact. Finally, this agreement entered into force with modifications and without the US, on December 30, 2018 and with a new name and acronym: the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP). It has eleven member countries, 495 million consumers and 13% of the world's GDP. (See www.wikipedia.org/). China applied for CPTPP membership in 2021.

For background information on the RCEP, its objectives, and the main commitments undertaken, see, among other sources of information, the official website of the RCEP Secretariat (www.rcepsec.org). For the full text of the RCEP agreement, see www.rcepsec.org/legal.text/).

For a trade analysis on the RCEP and its instruments, see the report prepared by UNCTAD: "A New Centre of Gravity. The Regional Comprehensive Economic Partnership and its trade effects", Division on International Trade and Commodities, UNCTAD 2021.

As we pointed out in our December 2020 newsletter, the RCEP introduces novel elements in the architecture of preferential trade agreements. In particular, these tend to facilitate regional value chains. In this regard, the application of Chapter 3 of the agreement on rules of origin and, specifically, the evolution of Article 3.4.1 on the possible modifications that may be introduced thereafter, will have to be closely monitored. This article confirms the idea that regional integration processes not only do not respond in their architecture to previous models, but also have the characteristic of being processes in permanent evolution in their long term construction. For more information on some of the main instruments of the RCEP, see its webpage and the webinar organized by its Secretariat, "Unlocking RCEP for Business Trade in Goods II. Rules of Origin, Operational Certification Procedures, Customs Procedures and Trade Facilitation", September 3, 2021, among others.

The entry into force of the RCEP highlights the need to deepen the analysis in our region on how to place the agenda of Latin American integration in the perspective of the new realities that are emerging in the functioning of the international trade system.

As we have pointed out on previous occasions, it makes the need to strengthen the role of ALADI more topical (see our October 2020 newsletter "The construction of Latin America as an organized region: a necessary task, with very long term objectives and uncertain results", www.felixpena.com.ar).

In addition to the role that ALADI can play in the design and realization of a Latin American system of preferential trade, especially focused on the joint work of the Mercosur and Pacific Alliance countries, and which would make it possible to take full advantage of the instruments already provided for in the 1980 Treaty of Montevideo-such as the partial scope agreements in their multiple modalities-we have previously pointed out three other issues that will require much action-oriented reflection.

These issues are:

  • the process of revitalizing the WTO as the cornerstone of the architecture of the multilateral world trade system (see the May, November and December 2021 issues of this newsletter).

  • the concretion of the much delayed bi-regional agreement between the EU and Mercosur, with unfolding developments that will enable to link it with other free trade agreements that the EU has already concluded with Latin American countries and, especially, with those of the Pacific Alliance (in this regard, see the September 2020, December 2019 and September 2019 issues of our newsletter ), and.

  • the connection that Mercosur establishes with existing agreements in the major regions of the global trade system and, in particular, with the Asia-Pacific, North America, Africa and Eurasia regions.

These are issues that give relevance to the above mentioned idea of strengthening the role that ALADI can play in the development and harnessing of the architecture of a potential Latin American common market. All of them imply the mapping, from a geopolitical perspective, of different strategic alliances between countries that are relevant for international trade (see the May 2021, November 2019 and June 2018 issues of our newsletter).

With respect to the points raised in this newsletter, and especially in the previous paragraph, we recommend reading the recent book by Xianbais Ji, mentioned below as recommended reading and which we intend to comment on in our next newsletter.


Recommended Reading:


  • Alconada Mon, Hugo, "Pausa. 25 referentes mundiales piensan como será nuestra nueva vida", Editorial Planeta, Buenos Aires, Diciembre 2020.
  • Alconada Mon, Hugo, "Pausa 2. 25 referentes mundiales piensan como será nuestra nueva vida", Editorial Planeta. Buenos Aires, Noviembre 2021.
  • Arguello, Jorge, "Celac: oportunidad para la Argentina y la región", en diario "Perfil", del 3 de enero de 2022.
  • Attali, Jacques, "La economía de la vida. Prepararse para lo que viene" (traducido por Pablo Krantz), Libros del Zorzal, Buenos Aires 2021.
  • Brunnermeier, Markus K., "The Resilient Society", Endeavor Literary Press, Colorado Springs 2021.
  • Coker, Christopher, "The Rise of the Civilizational State", Polity Press, Cambridge - Medford 2019.
  • Dalio, Ray, "Principles for Dealing with The Changing World Order. Why Nations Succeed and Fail", Simon and Schuster, London 2021.
  • Desmurget, Michel, "La fábrica de cretinos digitales. Los peligros de las pantallas para nuestros hijos", Ediciones Península, Barcelona 2020.
  • Diamond, Jared, "Guns, Germs, and Steel. The Fates of Human Societies", W.W.Norton & Company, New York - London 2017.
  • Estevadeordal, Antoni; Goldman Louis W. (editors), "21st Century Cooperation. Regional Public Goods, Global Governance, and Sustainable Development", Routledge, London - New York 2017.
  • Greenhill, Kelly M. "Weapons of Mass Migration. Forced Displacement, Coerción, and Foreign Policy", Cornell University Press, Ithaca - London 2015.
  • Hapewell, Kristen, "China looms behind regional trade agreements", East Asia Forum, December 24, 2021, http://eastasiafoum.org.
  • Huerta-Goldman; Gantz David A. (editors), "The Comprehensive and Progressive Trans-Pacific Partenership. Analysis and Commentary", Cambridge University Press, Cambridge - New York- Melbourne - New Delhi - Singapore 2022.
  • Lee, Shin-wha, "Middle power conundrum amid US-China rivalry", East Asia Forum, January 1st.2022, http://eastasiaforum.org.
  • Martín Jiménez, Cristina, "La Tercera Guerra Mundial ya está aquí", Ediciones Martinez Roca - Editorial Planeta, Barcelona 2021.
  • Peña, Félix, "Mercosur: alternativas para el impulso de los socios de menor desarrollo económico", en Suplemento Comercio Exterior del diario "La Nación, del jueves 23 de diciembre de 2021, página 3.
  • Peña, Juan Manuel; Alonso, José Luis, La Vuelta de Obligado y la Victoria de la Canpaña del Paraná", Editorial Biblos, Buenos Aires 2012.
  • Sharma, Ruchir, "The 10 Rules of Successful Nations", Penguin Books 2020.
  • Suominen, Kati, ""Revolutionizing World Trade. How disruptive technologies open opportunities for all", Stanford University Press, Stanford 2019.
  • Tapscott, Don, "Grown Up Digital. How the net generation is changing your world", Mc Graw Hill, New York 2009.
  • Xianbai, Ji, "Mega-Regionalism and Great Power Geo-Economic Competition", Routledge, London-New York 2022.
  • Zarazaga, Rodrigo, "La Pobreza de un País Rico. Dilemas de los proyectos de Nación, de Mitre a Perón", Fundación OSDLE, Siglo Veintiuno Editores Argentina, Buenos Aires 2004.
  • Wang. Dong, "Balancing US-China strategic competition and collaboration", East Asia Forum, December 26, 2021, http://eastasiaforum.org.
  • Westland, Tom, "China´s big moment of choice on trade policy" East Asia Forum December 12, 2021, http://eastasiaforum.org.

Félix Peña Director of the Institute of International Trade at the ICBC Foundation. Director of the Masters Degree in International Trade Relations at Tres de Febrero National University (UNTREF). Member of the Executive Committee of the Argentine Council for International Relations (CARI). Member of the Evian Group Brains Trust. More information.

http://www.felixpena.com.ar | info@felixpena.com.ar


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