Move and Counter-move

T
he world has always been an inquisitive olio of kaleidoscopic diplomacy. After the World War-1 we saw how nations toggled between alliances and camaraderie betwixt one another as globalization begun to spread its thousands of tentacles around the world. With the proliferation in technology, scarcity of resources and blurring of the boundaries the aforesaid trend has only gained more momentum and today we live in a world that is intricately connected.

A huge nexus. Tweak one string and the whole web vibrates. There were blood-wars in the past. Now there are trade-wars. The paradigm shift has caused many countries to cash in the benefits of trade blocs. Lo and Behold! Welcome to the era of Economic Integration. Here tariffs are the ammunitions and trade-areas bombs. Ladies and gentleman, welcome to the world of ‘soft-power’.

Today the largest trading nation with a GDP of more than $17 trillion USA stands as The Business Hub. China, yes, their oriental rivals. The recent rise in the populist narrative has raised some eye-brows across the world. USA was ringing with the “Make America Great Again” slogan and people were moved by the promise to “bring back our jobs”. So, we have the estate Mogul, Mr. Trump, as the president-elect who will assume office on 20th January, 2017. He has made few ambitious announcements and revealed some revolutionary plans. But it is often that what politicians use political sloganeering is in reality bitter paragraphs. His claims to repeal the Trans-Pacific Partnership (TPP hereinafter) has, inter-alia, send ripples across the seas reaching directly to their Far-Eastern and Pacific countries who are now confounded and incensed. Dislocating the President Obama’s “pivot to Asia” is not a small matter.

TPP is a trade deal that covers almost 40% of the world’s trade and includes 12 countries: Canada, Mexico, Brunei, Malaysia, Vietnam, Australia, New Zealand, Japan, Chile, Peru, Singapore and US. The trade deal has been finalized but this deal with 30 chapters running into 5000 pages needs to be ratified by at-least 6 member countries that constitutes 80% of the groups trade output. US alone constitutes 55-60% of it. Hence, its absence will certainly repudiate the deal. This has left many of the member countries pondering at the actual implementation of the deal.

Enters China, to the rescue of their neighbors and as well as other countries, holding a file titled: Regional Comprehensive Economic Partnership (RCEP). As I mentioned in the start, moves and counter moves. Chinese leadership is all ready to fill in the impending and expected void if created by president elect Mr. Trump. RCEP involves members of ASEAN plus India, Australia and New Zealand, South Korea, Japan and evidently, China. Seven of the countries superimpose each other in both the deals. However, there are few political and regional nuances that might come into effect as, and if, the deal progress. The first thing is the issue of South China Sea. Philippines, Malaysia and Vietnam all have laid claim on this significant trading route which hosts $5trillion of trade annually. The recent election of Mr. Dutetre in Philippines may help ameliorate the growing acrimony but the territorial infringement remains there. One thing China might be doing by peddling this RCEP is to solve this issue in its [RCEP] guise. As the economic bond with all the ASEAN countries which also includes the above three bolsters, the virtues of economic integration play their role. One of which is that the countries engaged in bi-lateral trade very rarely go to war or in conflicts with each other. Secondly, as the deal is “backed” by Beijing it might abet Chinese influence and legality in the trading bloc. Another intriguing partner is the Southeast Asian nation, India. India and China has engaged in word war from decades over the border claims. Also, both occupy the top slots for being the most populous countries in the world. Free movement of people can create a lot of issues. The domestic industries may also be effected. For the rest of the member countries all is hunky-dory. Both the trade deals have an equipoise importance.

TPP represents 13% of global trade and RCEP 12%. TPP countries are slow growing as compared to the RCEP ones. RCEP will cover almost half of the world’s population and TPP covers more than 800 million of people. But TPP tends to cater trade between richer countries than RCEP. The benefits yaw from one bloc to another. It is not about TPP or no TPP or RCEP. But it is certainly about the question: who writes the rules for the trade in Pacific. USA and China both are well acquainted of the significance of the region and hence, Mr. Trump’s revolting mindset is a cause of concern and surprise for many. He must know that if USA doesn’t than China is ready to ‘write down the rules’. The geopolitical, social and economic axis can shift and the gyrations may prove costly for the police man of the world. But we have to wait and see how much coherence the president-elect can instill in his pre-office and post-office life. This is a world today. Of trade clouts and economic weapons. I am not sure whether the US will continue to tread upon the precarious path adduced by Mr. Trump. But given his tilt for economic nationalism it is not hard to imagine that the biggest trade deal ever will see its demise very soon.

Osama Rizvi

Independent economic analyst, Writer and Editor

ABOUT MD

Modern Diplomacy is an invaluable platform for assessing and evaluating complex international issues that are often outside the boundaries of mainstream Western media and academia. We provide impartial and unbiased qualitative analysis in the form of political commentary, policy inquiry, in-depth interviews, special reports, and commissioned research.

 

MD Newsletter

 
Top