RCEP comes into force: Opportunities for China to dominate Asia-Pacific economies and challenges for Taiwan – BBC News 中文

In addition, Taiwanese public opinion is also hotly discussing the impact of the RCEP on Taiwan, which has not yet joined the CPTPP, after the entry into force of the RCEP. Taiwan has not yet joined the CPTPP. Although Taiwan is a member of the World Trade Organization (WTO), currently only New Zealand and Singapore have reached a Free Trade Agreement (FTA) with Taiwan. China has long opposed countries planning to negotiate a diplomatic and trade deal directly with Taipei. Therefore, Taiwan held a video conference this week (January 10) with Canada’s Minister of International Trade, Mary Ng, to announce the launch of the first exploratory discussion on the Investment Promotion and Protection Agreement (FIPA), which attracted international attention in particular.

Drafted in 2013, after four national leaders’ meetings and more than 30 rounds of formal negotiations, RCEP will come into effect on New Year’s Day in 2021.

After the RCEP came into effect, the point that attracted the most attention from all walks of life is how China benefits and influences the regional political economy. Therefore, after RCEP came into effect, Chinese official media, as well as pro-Beijing scholars and politicians in Hong Kong and Taiwan, spoke highly of RCEP, emphasizing the positive impact of the agreement on China.

Cui Weijie, vice president of the Research Institute of the Ministry of Commerce of China, told the official People’s Daily Online that after RCEP takes effect, it will provide more global goods and services to the market and consumers: “Attract overseas consumption and effectively improve the supply system’s response to domestic demand. Adaptability, activate the huge potential of consumption.” Cui Weijie also said that RCEP can promote the integration of industrial and supply chains in the region externally, attract foreign investment and talents to continue to develop in China, and promote the transformation and upgrading of China’s manufacturing industry.

Gladys also agreed that the importance of RCEP to China is mainly reflected in the trend of strengthening intra-regional trade, especially as China is the first or second trading partner of RCEP member countries. Therefore, RCEP can strengthen multilateral trade agreements in which China actively participates. America doesn’t. For example, it has been argued that for Beijing, RCEP is not only seen as a free trade agreement, but also a mechanism that can reshape its global supply chain.

Shen Rongqin, an associate professor at York University in Canada, commented on his personal website that because RCEP is a relatively basic free trade organization with lower requirements for state-owned enterprises, labor, and the environment, it is very suitable for China to join, and it is China’s leading priority to counter the US. One of the main reasons for wanting to join or even dominate regional economic and trade agreements.

Indeed, after the RCEP came into effect, many discourses assumed that China would dominate its operations and compete with the heavily American CPTPP.

However, Aya Adachi, an analyst at the Mercator Institute for China Studies (MERICS), a think tank based in Berlin, Germany, told the BBC Chinese that RCEP is expected to enhance China’s economic strength, and China will be considered the mainstay of the RCEP agreement. beneficiaries. She told the BBC that the US has been slow to promote trade ties with Asia since the US withdrew from the TPP, and “in this regard, China is currently one step ahead”.

Furthermore, given that RCEP is the largest trade agreement in the world’s GDP, Andaz agrees that China’s participation in RCEP is symbolic: “It allows Beijing to demonstrate its commitment to participating in trade negotiations and to abide by the rules, to demonstrate that it can reach an agreement with its trading partners. capacity. In an economic sense, it also allows Beijing to acknowledge its reliance on stable free trade — and to increase its efforts to maintain it.”

However, when it comes to CPTPP, scholars have different views.

Gladys stressed to the BBC that RCEP is limited to trade liberalization, the agreement does not contain labor, environment or digital trade, and cannot be compared with CPTPP.

Professor Shen Xuhui of Sun Yat-Sen University in Taiwan published an analysis that RCEP focuses on more traditional issues, such as general goods trade, service trade, etc. “First deal with issues that are easier to reach consensus, and then discuss more controversial issues.”

However, if compared with the CPTPP, Shen Xuhui explained that in addition to covering the trade issues of RCEP, the CPTPP also includes more diverse and more controversial issues such as government procurement, e-commerce, labor, and the environment. In addition, the CPTPP uses a single commitment system. Negotiations require the unanimous consent of participating countries on all matters to pass resolutions. “The negotiation flexibility is low… Therefore, it is obviously not easy for China to reach the threshold of the CPTPP.”

Andacai analyzed to the BBC that RCEP has little effect on resisting CPTPP. She believes this is because the main purpose of RCEP is to help consolidate existing production chains in East Asia, Australia and New Zealand. However, CPTPP includes members from the east coast of the Pacific Ocean such as Canada, Chile, Mexico and other countries, and allows other countries to apply for membership. CPTPP’s liberalization and regulatory coverage are much more comprehensive than RCEP.

However, the Trump administration announced its withdrawal from the TPP in 2017, when it was criticized by the outside world for the move that led to the loss of the country’s strategic position in the Indo-Pacific region. Therefore, after Biden took office, he began to strengthen cooperation with allies in the Indo-Pacific region in various fields.

In order to reshape the Indo-Pacific economic and trade strategy, U.S. Commerce Secretary Gina Raimondo announced during her visit to Asia in November 2021 that the U.S. would not reapply to join the CPTPP, but would actively promote U.S. President Joe Biden’s early The previously announced Indo-Pacific Economic Framework will be led by the United States. At that time, Raimondo said to the outside world that the United States will officially launch the “Indo-Pacific Economic Framework” at the beginning of this year, and will discuss details with its allies from this year onwards.

However, economic and trade scholar Shen Rongqin commented that the entry into force of RCEP is not good news for the United States. He believes that for now, the US government’s response to China’s economic and trade activities in the Indo-Pacific region is “very slow and insufficient. Not only does Biden have no intention of returning to the CPTPP, but the ‘Indo-Pacific economic structure’ that the United States wants to implement in the future is currently limited. Information-wise, the lack of trade policy could be a pain in the ass.”

After the RCEP came into effect, there was some public anxiety in Taiwan that Taiwan was excluded from the WTO’s large and small regional economic and trade agreements, especially the CPTPP. Many previous analyses have emphasized that the Taiwan government’s strong leadership in opening up the import of American “Lay pigs”, and the upcoming entry of food around Japan’s “Fukushima” into Taiwan, etc., are all to handle Taiwan’s application to join these regional economic and trade agreements.

Shen Rongqin believes that in the past decade or so, Taiwan has been excluded from the upsurge of world regional economic and trade organizations due to the ineffective functions of the World Trade Organization. Therefore, one of the biggest worries for Taiwan’s economy in the coming years is its continued exclusion from these international and regional trade organizations. He said: “Of course, we need to vigorously subsidize and support farmers who will be harmed by this, but to protect Taiwan’s future and get rid of the current situation of orphans in international economic and trade organizations, it is very important for Taiwan to join the CPTPP, and we need to pay close attention to the future of India. Too economical structure.”

Song Wendi, a lecturer at the Asia-Pacific College of the Australian National University, told BBC Chinese that from the relatively low threshold for RCEP to apply the principle of origin, Taiwan does not need to panic in a short period of time, but it does need to be vigilant and take prompt action to find a balanced alternative Program: “Whether it is CPTPP, or the Taiwan-US ‘Trade and Investment Framework Agreement’ (TIFA) or Bilateral Trade Agreement (BTA) with the United States, etc.”

Shen Rongqin analyzed that, according to data from Taiwan’s Ministry of Economic Affairs, Taiwan’s exports to 15 RCEP member countries totaled US$216.8 billion in 2019, accounting for 65.9% of that year’s total exports, while Taiwan’s cumulative investment in RCEP members accounted for as much as 80% of foreign investment. This shows the importance of RCEP to Taiwan. However, he explained that 70% of Taiwan’s exports to RCEP are information products with zero tariffs, which greatly reduces the impact on Taiwan. He said: “Among the remaining 30% industries, steel and auto parts and components are mainly sold to Europe and the United States. Most of the mid-stream and downstream textile industries have already deployed overseas, and the impact is not as amazing as the figures show.”

But Song Wendi also stressed that, indeed, RCEP, through China-centric economic regionalism (especially around Taiwan’s “New Southward Policy,” those economies around the South China Sea), “over time, these countries feel that they are economically A Chinese alliance will be the path of least resistance. Therefore, Taiwan needs to move quickly to construct alternatives while the window of opportunity remains open.”

For example, this week the Taiwan Executive Yuan met with Canadian Minister of International Trade Wu Fengyi by video, and the two sides agreed to “start exploratory discussions” on the Investment Promotion and Protection Agreement (FIPA). The discussions were “an important milestone in strengthening bilateral economic and trade relations.

“Taiwan is a key trade and investment partner as Canada broadens trade ties and deepens economic partnership in the Indo-Pacific,” an official statement from Canada said.

RCEP was originally initiated by the 10 countries of the Association of Southeast Asian Nations (ASEAN) and was officially signed in November 2020. Current member countries include: Australia, Cambodia, Thailand, Laos (Lao), Singapore, Vietnam, Japan, China, New Zealand (New Zealand) and Brunei. South Korea will join on February 1 this year, and Indonesia, Malaysia, Myanmar and the Philippines are also expected to join this year.

Comprehensive analysis, the main purpose of RCEP is to reduce tariffs. According to the RCEP agreement, any commodity exported by a member country, if more than 40% of the raw materials come from a member country, then exports to another RCEP member country can enjoy tariff preferences.

Dr. Tan Jinyu, a think tank “Taiwan Economic Research Institute” in Taipei, analyzed the Taiwanese media, saying that RCEP integrates several “ASEAN+1” free trade agreements that have already taken effect, and has been signed for the integration of members of various countries, but it is becoming more and more complicated. The gap between tariff rates and the establishment of the basis for common trade norms within the region.

She also emphasized that RCEP is also the first time to “indirectly” achieve free trade relations between China, Japan and South Korea, because the FTA between the three countries has not progressed significantly due to political factors for many years. After RCEP takes effect, Japan can significantly lower tariff barriers with China, its largest trading partner, especially the auto industry, she said.

According to The Wall Street Journal, tariffs on 86% of Japan’s industrial products exported to China are expected to drop from 6% to zero, including 87% of auto parts exported to China each year, worth $45 billion.

According to the data, about 19% of Japan’s exports to South Korea were tariff-free, and about 8% of its exports to China were tariff-free. RCEP will significantly increase this ratio to 86%.

Hong Kong scholar Shen Xuhui emphasized that although the RCEP was initiated by the 10 ASEAN countries, the leader has become China. For example, India decided to suspend its participation in RCEP at the end of 2019 because it was worried that after joining the China-led RCEP, it would not be able to resist a large number of cheap Chinese products entering India and weakening its own economy. Later, after the Sino-Indian border conflict broke out, India announced that it would not participate in any trade agreement involving China.

China has been a member of all RCEP’s major export destination agreements prior to entry into force. All members will also benefit from RCEP’s new Common Rules of Origin, which will help strengthen value chain operations in the region.

Andacai analysis, from the perspective of RCEP, when it comes to how to manage the economic interdependence with China, countries are generally aware of their own situation and are exploring other ways to respond to safeguard their own interests. Australia, India and Japan are working on a supply chain initiative that includes various Indo-Pacific strategies and domestic economic security adjustments, and these additional measures could be seen as one of the actions countries want to level the playing field.