[News analysis] Experts dispute claims that the RCEP is a “Chinese-led” agreement

Posted on : 2020-11-17 17:35 KST Modified on : 2020-11-17 17:35 KST
Blue House says S. Korea and ASEAN led negotiations
South Korean President Moon Jae-in and Trade Minister Yoo Myung-hee take part in the signing ceremony for the Regional Comprehensive Economic Partnership (RCEP) held via teleconference on Nov. 15. (Yonhap News)
South Korean President Moon Jae-in and Trade Minister Yoo Myung-hee take part in the signing ceremony for the Regional Comprehensive Economic Partnership (RCEP) held via teleconference on Nov. 15. (Yonhap News)

Claims by some trade experts and media that the Regional Comprehensive Economic Partnership (RCEP) is a “Chinese-led agreement” are being disputed. The remarks have emerged in the wake of the Nov. 15 conclusion of the agreement — considered the world’s largest free trade agreement (FTA) with the participation of 15 countries, including South Korea, China, Japan, and the 10 ASEAN members — after eight years of negotiations.

While some observers have cited claims of “Chinese leadership” in analyzing the future major trade agreement landscape as a “mega-FTA competition” between China and the US, the Blue House and administration explained that it was not China but South Korea and the ASEAN countries that spearheaded the process from the RCEP negotiations to the final deal.

Nam Hee-seop, a patent attorney and director of the Knowledge Commune who took part in the eight-year RCEP negotiations as a civil society expert, said on Nov. 16 that “while there have been quite a few articles calling the RCEP ‘Chinese-led,’ China has never led the negotiations as far as I am aware.”

“For you to claim that they have ‘led’ the process, they would have to have the capability to take a leading role in setting the agenda or coordination in cases of differences, and that hasn’t been the case with China at all,” Nam said.

“It would be more correct to say there hasn’t been any one country ‘spearheading’ it, or that ASEAN has been the driving force,” he suggested.

Kim Yang-hee, a Daegu University economics professor who is considered one of South Korea’s leading trade experts, said, “If China had been driving things, the negotiations would not have dragged out for this long after starting in 2013.”

“With the RCEP, I think the problem is that there have been so many ‘leaders’ that in some sense there hasn’t been any leader,” she concluded.

An administration trade official explained, “In terms of the content of the import duty agreement among the countries participating in RCEP, the basic framework has centered on the tariff concessions that apply commonly to the 10 ASEAN countries, with a process of negotiations taking place among non-ASEAN countries like South Korea, China, Japan, and Australia over the schedule and scope of tariff concessions on that basis.”

Agreement’s level of openness caters to ASEAN, not China

“The ASEAN countries have been successful in insisting that the level of openness concessions among non-ASEAN countries must not be more favorable than the level of openness applied with ASEAN,” the official added, indicating that the driving forces have been ASEAN and South Korea. In a press release, the South Korean government said it had “made substantial contributions to concluding the agreement,” explaining that it had “contributed actively to reaching agreements on major issues such as place of origin while playing an ongoing role of coordinating interests among non-ASEAN countries [South Korea, China, Japan, Australia, and New Zealand] during the recent final stages of negotiation, while periodically contacting the major ASEAN countries behind the scenes to encourage progress in the negotiations whenever they ran into difficulties.”

Various facts and circumstances point to China not having played a guiding role in the RCEP negotiations. A South Korean government official said, “In the case of tariff concessions [reductions and abolitions], the market openness and liberalization that China was asking for was at a lower level than what the ASEAN countries were demanding.”

“In terms of the level of tariff concessions among the three countries of South Korea, China, and Japan, China established the position from the outset of the agreement that we should reach an agreement in the 80-90% range without pushing for too high a level of openness,” the official added.

Some analysts have predicted that interim US President-elect Joseph Biden is likely to participate again in the Japanese-led Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP, 11 countries), viewing the RCEP deal as having been spearheaded by China to counter a potential large-scale US-led “mega-CPTPP” if this happens. But the explanations indicate that China actually decided on a lower level of market openness, which determines the influence of the RCEP agreement.

India’s withdrawal from agreement

The claims of China being a “driving force” of the RCEP are also undercut by the example of India, which was absent from the conclusion and signing of the deal after declaring last year that it was bowing out of RCEP negotiations. The reason so little progress was made over the eight years after negotiations were initiated was attributed to China being like a “heavy 20-foot container hanging off the back of the ‘RCEP truck.’” India had been consistently reluctant to reach agreements, fearing a flood of cheap Chinese industrial products and Australian farming products into its market amid the openness measures. With India’s concerns about a “Chinese-led RCEP,” China took a step back in the negotiation process in order to bring India back into the agreement. Other RCEP participants also reportedly hoped for China to take a more passive “backseat” role rather than taking the lead.

While the RCP regional bloc is indeed the world’s largest in terms of trade scale, population, and GDP, the level of market openness associated with it is actually lower than with other large-scale regional trade agreements. Whereas the CPTPP encompasses a very broad scope of areas such as services, labor, intellectual property rights, competition, and investment policy, the RCEP is focused chiefly on incremented tariff reductions on industrial products and integration of place of origin regulations among the participating countries. Viewed purely in terms of the level of openness, the agreement’s content could be seen as being not especially ambitious.

China’s aim with the RCEP has been less to export more of its own goods than to expand into ASEAN with its Belt and Road Initiative, which has been called a “21st century land- and sea-based Silk Road economic belt.” This means that with the RCEP being a trade agreement targeting tariff abolitions and reductions, China’s focus on the Belt and Road Initiative over tariffs meant that it either did not or could not play a leading role in the RCEP negotiation and conclusion process.

By Cho Kye-wan, staff reporter

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