China working to create largest regional trade bloc

Dhaka,  Monday,   2016-09-21
Published : 21 Sep 2016, 19:48:11

China working to create largest regional trade bloc

China is working towards creating one the largest trading block in history spanning from India to Japan, a top US trade official has said. US Trade Representative (USTR) Mike Froman said that not signing Trans Pacific Partnership (TPP) would be akin to conceding the Asia Pacific space to China, reports PTI.

“China is executing on its regional strategy: the One Belt, One Road initiative, the Silk Road Fund, the Asian Infrastructure Investment Bank, the challenges in the East and South China Seas, and its push to conclude the regional comprehensive economic partnership, or RCEP,” Froman said on Tuesday in his address at the Rice University’s Baker Institute for Public Policy in Dallas Texas.

“RCEP is a mega-regional trade agreement with 16 countries, spanning from India to Japan. It would be the largest regional trading block in history. Russia too has an active regional strategy, signing partnership agreement with countries in the region and through its Eurasian economic union,” Froman said.

Observing that China is posing a major challenge to the US, Froman said that answer to this challenge was to put TPP in place as soon as possible.

“China is not our adversary. But it is a competitor that in many respects holds very different views of its role and responsibilities than other major powers,” he said.

“There is a perception that China doesn’t play by the same rules that we and much of the rest of the world do, that it’s taking advantage of us, and that it’s asserting its interests in the Asia-Pacific region, and more generally, at the expense of ours and at the expense of its neighbours,” he added.

What is interesting about this debate is that while the diagnosis might be right, many have come to exactly the wrong prescription. The answer to this challenge is not to allow China to write the rules of the road for trade, but for the United States to lead that effort, he said.

“The answer is not to allow China to carve up the markets of the future, but to level the playing field and give American workers and businesses a shot to compete and win. The answer to China’s challenge is not to withdraw from TPP, but to put it in place as soon as possible,” Froman said.

He said that at a time when political discourse in the US was increasingly turning inward, it is worth recalling what’s at stake in the Asia-Pacific.

The US is a Pacific power with a long history of leadership and deep interests in the region, he asserted.

Forman warned that for the US turning inward meant turning away from this century’s greatest economic opportunity.

The Asia-Pacific is one of the world’s fastest-growing regions, home to nearly half of humanity and over one-third of the world economy. In less than 15 years, two-thirds of the world’s middle class will call the Asia-Pacific home, and they will want more of everything that America is great at making, Forman argued.

“From cars to cosmetics, from apps to streaming movies, from beef and pork to fresh fruits and vegetables. And their governments and businesses will be among the fastest-growing investors in everything from infrastructure to aircraft to satellites — all of which we lead the world in producing. TPP puts us at the centre of that growth story,” he said.

It brings together 12 countries comprising nearly 40 per cent of the global economy, countries large and small, developing and developed, to define high standard rules of the road for the future of international trade, Froman said.

He said it cut or eliminates over 18,000 foreign taxes or tariffs on US exports, making it easier for American workers, farmers, ranchers, and businesses of all sizes to compete and win in the global economy.

Froman said the RCEP kinds of arrangements present a very different future than that envisaged by TPP. Unlike TPP, these agreements do not raise labour and environmental standards.

They do not ensure that government owned corporations have to compete fairly against private firms. They do not protect intellectual property rights and they do not maintain a free and open Internet, he said.

According to Froman, without TPP, US’ partners in the region will question the wherewithal of America as a Pacific power.

“If Congress fails to follow through in a timely fashion, they will have no choice but to question the reliability of our commitment to the region. And failure to lead in the Asia Pacific will have broad spillover effects around the globe,” he warned.

“Whether it’s negotiating other trade agreements, leading international economic policy, or making commitments to countries outside of the economic realm, turning inward and failing to deliver on our promises undermines the credibility of the United States more generally,” he said.

- TS

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