“Great thing for the American worker, what we just did,” Trump said immediately three days after his inauguration on withdrawing from the TPP. The unanimous view of other 11 members on this act by the leader of the world’s powerful member state, replicated the comment of Shinzo Abe à “Meaningless”. The reason being that America was consisting three fifths of the blocs combined GDP. After all the sweat that went into making of this coalition and its subsequent formation in 2015, only Japan ratified with all them members about to follow suit. With one US election promise being satisfied, the whole plan is in shambles now.In spite of all these events, Deborah Elms says that Vietnam, the poorest member might even gain from the coalition moving forward without America. The access to richer markets would help this country in growing its underpinned garment industry. There is huge gain in favor of all the developing countries which is that they do not have to adhere to most mandatory standards which are predominantly used only to lure the American consumers using the quality perception. Yet, why are countries receptive in taking the steps to offset the loss of a behemoth. One thing. Only one thing. Fear. They do not want to be portrayed as an opponent leading a trail of countries against the world’s largest consumer market and arsenal holder. Since the vocal support for this agreement proves that it would eliminate about 18,000 tariffs and create jobs across the pacific and the US mainland, analysts don’t rule out the possibility of US rejoining the TPP either during Trump’s era or with another president at its helm.
What is RCEP doing then? Touted as the last big trade bloc standing, its reliability with the Asian giants dominating the bloc seems the right step for the developing nations involved and the partner countries willing to have ties with it. It’s all out war as I write this article on 20th July as the Us has bombarded tariffs on Chinese goods worth $200 billion and is waiting to further it to the complete $505 billion trade import into the US main soil. But China can’t replicate to this extent as the current trade balance is in their favor. The net loss is landing on the shoulders of the Chinese Dragon.
Soon after US exit from TPP, there was a meeting convened in Tokyo, the first high level meeting happening outside the ASEAN regarding the RCEP. Since the American conglomerates were looking for efficiency all along and shifted their supply chain operations globally, Asia is to fall victim when the US withdrawal from World trade starts impacting the local businesses. It is high time that the Eastern Globe emerges as a single market aided by the rapidly exploding consumer market to dominate the world trade. Since China and Japan are leading the RCEP transformation at the world scale now, the Asian economies are opening up to facilitate trade within the member states. The world skeptics can’t presume that the manufacturing sector would bounce back to America after this shift. There is a huge probability that the Asian players might create a self-sustainable system to utilize the fallen supply chain linkages, bring them together and create a world class production network. Then the west has to look at the counterpart at awe!
If China is poised to become the king in the arena, who are going to be its kingmakers? It needs allies for sure. The One Belt One Road initiative itself deepens the Chinese presence in one more continent. This RCEP masterstroke would enable much needed growth as a trade bloc and also fortify its position as the next lighthouse illuminating the path of excellence for its geographical neighbors. The 21st century free trade hurricane has a new eye for its ruthlessness. It is going to be RCEP with China as the ringmaster. This would serve as a opposing force to Obama’s pivot to Asia strategy with the inception of TPP. India’s participation in all this trade action is ambiguous as the country is focused on its Make in India initiative as of now and doesn’t resonate with the overall goal of opening up borders for imports. Possible spillovers from the tension occurring over territory might influence the discussions that are going to place points on RCEP’s agenda. Countries such as Australia which have interest in both RCEP and TPP have taken the wait and watch mode as different world ramifications include events such as the Brexit, Korean peace talks, Iran sanctions and GDPR law enaction.
The current scenario points that the RCEP is far from perfect as the negotiations are taking place at a snail’s pace and needs drastic improvement over the timeframe. Thought TPP offered wider scope in terms of tariff elimination and market coverage, the living standards are rising in the Asian continent and laws have to be amended and regional blocs fructified to realize a sustainable future.