NVDB005_-_CH_4.002._RCEP_CPTPP_and_IPEF_all_coexist_-_Zhang_Weiwei-2

77 — DP Vol. 05

Regional Security Dilemma: Trends, Directions, and Illusion

With the launch of the negotiations on the Indo-Pa- cific Economic Framework (IPEF), Asia-Pacific regional economic cooperation is once again facing new devel- opments. The Asia-Pacific region currently has two comprehensive economic cooperation mechanisms, the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). If the IPEF takes shape by the end of next year as planned, it will become the third economic cooperation mechanism in the region. These three mechanisms are distinct, reflecting the two forces currently shaping economic cooperation in the Asia-Pacific region.

Firstly, the origins of the mechanisms are different: RCEP is distinctly endogenous, while CPTPP and IPEF have a strong US imprint; RCEP originated from the endogenous demand of East Asian countries to join forces and strengthen their economies following the 1997 Asian financial crisis. Accumulated from the experiences of ASEAN+3 and ASEAN+1 cooperation, ASEAN formally proposed in 2011 to launch RCEP negotiations on the format of 10+6, including 10 ASEAN countries plus China, Japan, Korea, Australia, New Zealand and India. Progress in the negotia- tions was slow due to the large number of member countries and the vast differences in their overall sizes and development levels. Significant advances have been made since 2017, as the political will to reach an agreement has increased. The CPTPP was born out of the Trans-Pacific Partnership (TPP), which was led by the US and Japan in succession. It is modelled on the Trans-Pacific Partnership FTA signed by Brunei, Chile, New Zealand and Singapore in 2005, and includes provisions on intellectual property protection, state- owned enterprises, labour rights and other issues of concern to the US. In 2017, Trump announced his withdrawal from the TPP negotiations after taking office. The IPEF, on the other hand, is a framework introduced after the Biden administration took office, in order to fill in the absence of US economic strategy for the Indo-Pacific region. The IPEF is a new initiative and the content of which is not yet clear.

Secondly, the nature and objectives of the mechanisms are different. RCEP is a traditional trade liberalisation agreement that aims to lower all forms of trade barriers and create more trade and investment opportunities between member countries. The CPTPP is described as a “high level” FTA that aims to reduce traditional trade barriers such as tariffs, as well as to set high standards on issues such as digital trade, intellectual property protection, labour rights and environmental protection. The purpose is to achieve a higher degree of liberalisation within a specific group of states. The IPEF, on the other hand, is mainly focused on setting standards and not concerned with trade liberalisation. The US intends to use the so-called “high standards” of the IPEF to further open up the Asia-Pacific markets in certain fields and to reshape the supply chain system of specific industries. A number of US officials have bluntly stated that counteracting China’s influence is the main consideration in launching the IPEF.

Thirdly, the focuses of the mechanisms are different: RCEP focuses on creating more inclusive and open regional economic integration. The agreement provides for member countries to achieve zero tariffs on more than 90% of their trade in goods, either by reducing tariffs to zero immediately or gradually over 10 years, and allows for a certain degree of agricultural quotas. The agreement simplifies customs clearance procedures, reduces technical barriers to standards, technical regulations and conformity assessment procedures, consolidates and upgrades the investment rules of the five original 10+1 FTAs, and increases certainty of market access. Particularly notable is the “Regional Cumulative Rules of Origin”, which provides that materials of origin from other member countries used by member companies in the production process can be considered as originating materials, thereby cumulatively increasing the proportion of originating value components. As long as 40% of a product is produced in a RCEP member country, it will enjoy preferential tariff treatment. This liberal approach greatly facilitates intra-regional trade and the strength- ening of intra-regional supply chain cooperation. The

Zhang Weiwei is Deputy Director of the Department of International Strategic Studies at China Institute of Interna- tional Studies (CIIS). Her major research areas include: US policy toward Asia, China-US relations, regional economic cooperation, etc. She has published hundreds of academic articles, critiques, policy papers on the above areas. Her recent articles cover US Indo-Pacific Strategy, US-China ‘Delink’, IPEF, US-European Trade and Technology Council and so on. She was a visiting scholar at Tsukuba University 2008-2010. She has authored the Chapter of Chinese Public Diplomacy in the CIIS Bluebook on International Situation and China’s Foreign Policy for 11 consecutive years.