Excluding China in Western-led regional trade talks makes no sense
He Yafei says excluding China from Western-led regional trade negotiations smacks of political gamesmanship, and warns that any move away from a multilateral approach will be detrimental to all
We are witnessing the balkanisation and fragmentation of traditional multilateralism today, which has resulted in a mushrooming of both bilateral and regional free trade agreements in recent years. On the one hand, this phenomenon of "going regional" has certainly promoted economic growth in different parts of the world and, by extension, benefited the global economy as a whole. But, on the other hand, it has been hijacked to serve the geopolitical purposes of some countries to the detriment of others.
Let's look at the positive side first. By the end of July this year, there were 249 regional free trade agreements registered with the World Trade Organisation, of which about 70 per cent were created in the past 10 years. As far as Asia and China are concerned, the China-Asean free trade agreement was completed in 2010. After that, the "10+3" and Regional Comprehensive Economic Partnership negotiations were launched.
Intra-Asia trade increased from US$800 billion in 2000 to the present US$3 trillion, and Asian trade with the rest of the world grew from US$1.5 trillion to US$4.8 trillion in the same period.
China has signed 12 free trade agreements, with another six being negotiated right now. It is China's economic growth strategy to have a network of such agreements, starting from Asia and eventually covering the world at large.
Three mega negotiations on regional arrangements are going on right now. It is said that these "Big Three", once completed, will redraw the contours of the post-Western world and rebalance the economic order of advanced nations and emerging markets, with China as its leader. It will also determine the future of multi-lateralism as "an open global arrangement" or "competing blocs".
The Big Three are: the Trans-Pacific Partnership of 12 countries led by the US, with annual commodity trade at US$4.3 trillion; the Transatlantic Trade and Investment Partnership between the US and European Union; and the Trade in Services Agreement between the EU and 20-odd economies of both advanced and developing countries, including the US. What are the problems with these three negotiations?
One, they demonstrate that the US and the West has lost interest and trust in the grand multilateralism that defined the post-war era, particularly since the outbreak of the financial crisis in 2008. Over the past few years, developing countries have become the engine of global economic growth. The combined gross domestic product of the BRICS countries has surpassed 20 per cent of the world total. From 2008 to 2012, the export volume of developing countries has grown much faster than that of advanced nations.