Economic ministers from 16 Asian nations are due to gather in Tokyo next Sunday to discuss a big plan most Americans probably haven’t heard of.
It is called the proposed Regional Comprehensive Economic Partnership.
If RCEP becomes reality this year as some of its proponents urge, the new alliance would cover terrain with a combined 3.4 billion people and an overall gross domestic product of some $49.5 trillion.
The key players would be China and India. By design, the pact would exclude the United States and Canada.
So while the Trump administration and trading partners go tit-for-tat on tariffs, new light could be shed on last year’s U.S. withdrawal from the Trans-Pacific Partnership.
Unions, “free trade” skeptics and aides to President Donald Trump had denounced President Barack Obama’s controversial TPP. Objections involved expanded corporate power, jobs and human-rights considerations.
But keeping or renegotiating TPP, with a dozen Pacific Rim nations, also would have gelled a business understanding with the United States that excluded China and India.
That is, it might have done something to offset this brewing China-first deal.
“The RCEP had no chance of helping China dominate the Pacific so long as America pursued the Trans Pacific Partnership,” wrote David Cay Johnston, an author and editor-in-chief of the website DCReport.org.
“But Trump abandoned the TPP and China’s plan is ascendant.”
Last week’s developments were more incremental.
For one thing, the GOP-controlled Senate rebuked Trump by voting to reimpose U.S. measures against Chinese telecom giant ZTE.
With backing from both parties, the anti-ZTE provision was included in a defense-spending bill. The company has been called a national security threat given brisk business conducted with North Korea and Iran.
The Commerce Department earlier barred ZTE’s use of U.S. parts and equipment, effectively shutting it down.
Last month, Trump suggested that China lost “too many jobs” due to ZTE’s U.S.-induced shutdown.
Then Commerce Secretary Wilbur Ross touted a quickie agreement with China to allow monitoring of ZTE and protect U.S. interests. But the Republican-run Senate isn’t buying it.
Meanwhile, Trump’s trade adviser Peter Navarro declared the tariffs now planned will be “ultimately bullish” for American business as the administration tries to bring “structural change” to the trading picture.
Trump threatens to impose duties on an additional $200 billion in Chinese imports. In response, Beijing’s ministry of commerce stated: “If the U.S. loses its senses and [carries them out], China will have to take comprehensive quantitative and qualitative measures.”
Add a China-first RCEP to the picture, and it all could become more challenging.