Amid US-China trade war, could EU be next to join the CPTPP?
- Experts predict economic uncertainty facing Asia won’t end even if the US and China resolve their trade tensions
- To hedge against future disruptions, the 11-nation trade bloc known as CPTPP could join forces with the EU, suggest regional experts in an Asia Society paper
As Asian economies grapple with the fallout from the ongoing trade war between the US and China, greater cooperation with Europe may become an increasingly attractive prospect, experts say, diversifying partnerships and fortifying the region against future economic shocks.
The region’s 11-member pact known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or CPTPP – signed by five Asean economies as well as Japan, Australia, New Zealand, Canada, Mexico and Peru – could expand to include the European Union.
The Asia Society Policy Institute last week released a report detailing how Asian economies could continue to benefit from trade despite uncertainties generated by the US-China stand-off. The report said the EU should consider joining the CPTPP, enabling it to become part of the Pacific regional supply chain.
The EU has or is in the process of negotiating free trade agreements with every CPTPP member nation except Brunei, and is by dollar amount the third-largest importer from and exporter to CPTPP members – behind only the US and China.
“The CPTPP builds on what the EU has already accomplished in its agreements with individual Asian countries,” said Wendy Cutler, vice-president of the Asia Society Policy Institute and former US trade negotiator for the Trans-Pacific Partnership, the CPTPP’s previous iteration.
Trade tensions between the US and China could persist at least into the medium term, said Cassey Lee, senior fellow at Singapore’s ISEAS-Yusof Ishak Institute, which could lead to a restructuring of supply chains and a decline in investments across the region.
Asian nations may therefore need to look as far as Europe to ensure stability from a diverse set of trading partners, Lee said.