• Tue
  • Dec 23, 2014
  • Updated: 8:07pm
Macroscope
PUBLISHED : Wednesday, 09 July, 2014, 12:38pm
UPDATED : Thursday, 10 July, 2014, 11:44pm

Regional trade deals can advance integration of economies

Mega-regional treaties may set the trend for comprehensive partnership among members if they live up to the hype and escape from politics

Politics has a habit of getting in the way of business - and negotiations on a clutch of major regional free-trade deals prove the point.

Three so-called "mega-regionals" are being discussed, and all three appear to have an underlying political imperative behind them.

As I argued in this column back in January, any assessment of the economic costs and benefits of mega-regionals must be tempered by political economy considerations.

And on the face of it, the exclusionary character and trade-cost-raising tendencies of mega-regionals make them obviously inferior to the World Trade Organisation.

Except that all the mega-regionals, to some extent, reflect a trend towards deeper integration and consolidation.

The RCEP economies are drawn quite closely together in global value chains

And if this deeper, more progressive and inclusive kind of integration were to take hold, the agreements signed would go beyond anything the WTO could aspire to achieve.

So how likely is that outcome?

The 10 economies comprising the Association of Southeast Asian Nations plus Australia, China, India, Japan, New Zealand and South Korea gathered in Singapore two weeks ago for their fifth round of negotiations on the Regional Comprehensive Economic Partnership trade agreement.

The agreement, together with the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership, could transform the policies of some members and bring huge benefits - if they live up to the hype and escape from the politics that has spawned them.

The United States-dominated TPP is widely regarded as part of the country's China-containing "pivot". The US-European Union TTIP has been portrayed as a last-chance effort of powers in relative decline to write the 21st-century rule book for real-sector international economic co-operation. The regional agreement could be seen as a China-led geopolitical response to these power plays.

In a political sense, the mega-regionals are the diplomatic low road trod by governments disavowing potential gains from multilateral co-operation. But if governments with sufficient heft are unwilling to drive the multilateral process, there is little point in merely disparaging preferentialism.

This brings us back to the RCEP and its economic potential. The initiative is billed as "a modern, comprehensive, high-quality and mutually beneficial economic partnership agreement".

The other mega-regionals aside, the RCEP would be the world's largest trading bloc, accounting for a third of global gross domestic product, half the world's population and 40 per cent of trade.

Intra-RCEP trade is also about 40 per cent of total trade in the region, but the figure jumps to 60 per cent if only trade in intermediate goods is taken into account. This suggests the RCEP economies are drawn quite closely together in global value chains. That provides a solid base for building on existing economic links and policy co-operation.

RCEP negotiations comprise the usual range of issues, including trade in goods and services, investment, intellectual property and dispute settlement, but they also contain the seeds of deeper, broader and more inclusive integration.

Much of this is encompassed in the notion of economic and technical, or ecotech, cooperation as being an integral part of integration, which dates back to discussions in the 1990s under the Asia-Pacific Economic Cooperation banner.

No fixed list of activities is covered, but it can include such matters as trade facilitation and investment in physical and human infrastructure.

This conception of co-operation goes well beyond a free-trade agreement, getting much closer to a comprehensive economic partnership. It extends the agenda beyond liberalisation to development and a more profound form of integrating cooperation.

Not all RCEP parties are equally enthused about this orientation, fearing that it will detract from the more traditional, contractual commitments favouring trade, investment and opportunities in the marketplace.

But with regional preferential trade initiatives crimping serious engagement in the World Trade Organisation's Doha Round, a deal like RCEP might just be the thing to galvanise wider action.

Patrick Low is vice-president of research at the Fung Global Institute

Share

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive
 
 

 

2

This article is now closed to comments

53458609-0904-4802-a6b4-52b80a3209cb
SECRET TPPartnership, CETAgreement & C-CITreaty & TRIBUNALS are INSIDER TRADING; corp. Canada fears China may Blow "Arrangements" between Can. Lobbyists' Clients & Parties' Executives (W.A.D. Accord*)? NON Shareholders HAVE TO PAY the arranged PENALTIES. Repatriating off-shore; profits, goods & services contracts, financing, etc. and co-manufacturing still not on the table? LINE UP to IPOs SHOrtens.
What the TREATY of VERSAILLES was to the 20th century PALES in COMPARISON to the TPP, CETA, C-CIT, NAFTA, et al, in the 21st.
There are several reasons for the secrecy ("omerta") of the dispute resolution tribunals.
1) To Protect the parties to the treaty, &/or, agreement, ie. corporate sponsors, from having to reveal to the non shareholding tax payers the existing arrangements that it has with its own government. For instance, the Canadian W.A.D. Accord suggests that corporate Canada's lobbyists pay considerations to the executives of the political parties for two main reasons:
A) to promote corporate Canada's agenda...
...For the FULL ARTICLE, see;
Google: "TPP...INSIDER TRADING; David E.H. Smith",
&
Facebook; "David Smith, Sidney, BC" to the access List of RECENT ARTICLES & CORRESPONDENCES by DEHS.
53458609-0904-4802-a6b4-52b80a3209cb
"WELL, YOU SHOULD HAVE KNOWN".
- U.S. president George H.W. Bush reneging on the arrangements between corporate America & corporate Canada; NAFTA. C-CITreaty, CETAgreement, TRANS PACIFIC PARTNERSHIP (TPP), et al, NEXT?
...did President Bush mean that the aforementioned Canadians representatives did do their due diligence & it was the Canadian representatives who should have told the aforementioned 95% - 99% of the grassroots Canadians that the above due diligence procedures were in place, but, the grassroots Canadians have to pay the costs of procedures & penalties because
they, the grassroots Canadians, had not thought to inquire that the procedures were in fact "in place", & thereby, ensure that the aforementioned procedures, etc. would ensure that the either, corporate Canada, or, corporate America would pay for both; the penalties & the procedures.
And, if corporate Canada fails to provide the plebiscites, et al, when will the grassroots be enabled to sue both of the corporate Canada's escrow accounts which corporate Canada will have to set aside the funds for the grassroots legal funds as a prerequisite (ie. to investigate & prosecute; a) corporate Canada & b) the other signers to the Treaty, Agreement, Accord, et al)?
For more on corporate Canada's international arrangements in the context of The WAD Accord & their global economy, see;
Facebook; "David Smith, Sidney, BC" to access the List of RECENT ARTICLES, LETTERS & NOTIFICATIONS by DEHS.
 
 
 
 
 

Login

SCMP.com Account

or