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TPP vs. RCEP: A new Washington-Beijing tug-of-war?

The Nation December 6, 2012

TPP vs. RCEP: A new Washington-Beijing tug-of-war?

Suthichai Yoon

How the government navigates the contest between the United States and China in the economic sphere will be a litmus test of Thailand’s diplomatic and political skills.

Thailand has shown "interest" in joining the Trans-Pacific Partnership (TPP). It is also a member of the new Regional Comprehensive Economic Partnership (RCEP).

The US is the engine behind the TPP, which doesn’t include China. The RCEP has China as a major founding member, and the US isn’t part of that new regional scheme.

Will the two regional "free trade" ideas collide? Or will they complement each other?

What is obvious at this stage is that there will be at least a certain degree of competition between Asean’s RCEP - which represents an agreement to commence negotiations early next year, according to the agreement reached at the East Asia Summit (EAS) in Phnom Penh on November 20 - and the TPP.

Thailand at this point appears to be closer to the RCEP than the TPP but Washington has put pressure on Thailand to at least "show interest" in embarking on discussions to join. Premier Yingluck Shinawatra did exactly that when US President Barack Obama visited Bangkok recently.

The two groupings may share some basic objectives - trade liberalisation and economic integration - but critics here point to the fact that the TPP isn’t confined to economic cooperation. In fact, it’s the political implications of being part of this "higher level" of integration that have cast suspicion on the "hidden agenda" of the TPP move, which is publicly associated with "the objective of shaping a high-standard, broad-based regional pact".

Opponents in Thailand are concerned that if Thailand shows haste in joining the TPP, the country could plunge into a bottomless abyss. They have pointed to the dangerous "trap" of being drawn into areas of intellectual property rights and patent registration that will adversely affect Thailand.

Advocates here, however, insist that Thailand can’t afford to "miss the train" and should make every effort to become part of regional economic integration, which will become an inevitable trend for the future.

Premier Yingluck, trying to calm the vocal opposition over this issue, has insisted that the process of joining the TPP will be a long one. She promised that the private sector will be consulted before the government makes a decision. Besides, the government will have to seek parliamentary approval before any concrete action.

The TPP is the result of an agreement reached by New Zealand, Chile, Brunei Darussalam and Singapore in 2005; the US, Canada, Australia, Peru, Vietnam, Mexico and Malaysia have since joined. Japan and South Korea have also come on board. Officially, the TPP’s aim is to set up a regional free trade area (FTA) to further liberalise trade in the Asia-Pacific region.

Washington has more or less turned itself into the champion of the TPP, which will cover goods and services, investment, intellectual property rights, environmental protection, labour, financial services, technical barriers and other regulatory issues.

A senior Washington-based Thai diplomat told me: "The United States has to push the TPP hard because Washington, unlike China, doesn’t have any real FTA arrangements with Asian countries so far."

So far, the RCEP hasn’t been challenged by Thai academics or business leaders. Asean has FTA pacts with such non-Asean countries as China, Japan, South Korea, India, Australia and New Zealand.

The RCEP is, after all, an Asean initiative aimed at gathering all the FTA arrangements into an integrated regional economic pact. Hopefully, it will allow deeper economic cooperation than the existing FTA agreements.

The RCEP is seen as a strictly economic move, and with Thailand being an active member from the beginning, the concept has drawn little suspicion, except the lurking question as to how it can benefit the country in real terms.

In broad terms, some observers have noted that the TPP and RCEP may represent a new point of conflict between the US and China, each trying to shape economic cooperation groupings in Southeast and East Asia to promote their respective economic interests, which in turn inevitably carry political and security implications.

Some academics within Asean have already expressed concern that competition between the two agreements may split Asean members. Singapore, Malaysia and Vietnam appear to have jumped onto the TPP with both feet, while the other Asean members are more inclined towards building up the RCEP as the main regional economic body.

Will this drive a wedge into Asean’s "centrality"? Asean has so far concentrated on initiatives such as the EAS and Asean+3. Asean stands to lose clout as the region’s driving force if it fails to effectively navigate in the right direction, in the wake of the new Washington-Beijing face-off.

Asean will have to decide how to move the RCEP forward as the major economic integration concept, while linking up with the TPP to pave the way for a wider, more broad-based cooperation scheme. To achieve that highly complicated and challenging goal, however, Asean members will first have to get their act together.

 source: The Nation