RCEP, Greater Eurasia and the coming New world order

While Trump canceled freetrade agreements like TTIP and TPP, renegotiated NAFTA and pushes protectionism and trade wars, the Asians want to choose the other way by the Regional Comprehensive Economic Partnership (RCEP). While India is still hesitating to sign the RCEP agreement because in India there is an anti-.Chinese mood, fears of am alleged buy out, Buy Indian campaigns and worries that China might create a sinocentric order in Asia, the ASEAN countries are divided about a RCEP with or without India. While some as Malaysia are more pro-Chinese and see Trump´s trade war and protectionism against them more a threat than being dominated by China, others still don´t want RCEP without India as a balancing power.

Interesting that German Chancellor Merkel just visited India at this moment to propose a freetrade agreement between Germany, the EU and India after the EU already signed a free trade agreement with the Mercusor countries in Latinamerica and an EU-Japanese free trade agreement. Germany and the EU don´t want Asia playing the dominant and sole role in further globalization, free trade and multilateralism. However the EU is taking this Asian effort seriously as it is not just an economic agreement, but also a political signal. In their article „Asia pushes back against global protectionism with big trade and cooperation agreement“ (6 November 2019), Peter Drysdale and Adam Triggs analyze the meaning of RCEP:

„The world view of populist politicians has been in the ascendancy, characterised by isolationism, protectionism and nationalism. The path to prosperity, they argue, is one where economies are closed. Trade is restricted. Markets are managed. Foreign investment is blocked. Immigrants are expelled. Economic cooperation is for the weak.

The protectionist, isolationist economic model of the populists has been nothing short of a catastrophic failure, associated with a collapse of global confidence and investment that threatens global jobs and growth. Global GDP growth is falling, trade growth has halved since 2017, foreign investment has fallen by almost a third since 2017 and supply chains are unravelling at dangerous speed, threatening a sharp rise in production costs and a sharp fall in already anaemic productivity growth.

The leaders of the ASEAN+6 group — which includes the 10 ASEAN countries plus Australia, China, Japan, South Korea, New Zealand and, hopefully soon, India — are poised to sign the Regional Comprehensive Economic Partnership (RCEP) agreement, comprehensively rejecting the flawed economic model advocated by political populists.

In signing RCEP, Asia has chosen openness over protectionism, regionalism over nationalism, cooperation over confrontation, and solidarity over suspicion. They have sent a clear and unambiguous signal to the world: that Asia remains very much open for business, committed to the open regionalism that has seen East Asia’s share of global GDP soar from 15 to 30 per cent since 1980, while South Asia’s remains stubbornly has not budged, stuck around 3 to 4 per cent.

RCEP was hard fought, but a choice made easier by the calculation that Asia needed to push back against protectionism even as the United States chose that path.

For countries seeking new sources of growth, increased living standards and fresh productivity growth, regional cooperation was the answer. Analysis by Australia’s Productivity Commission presented the options in stark detail: choose protectionism, and ASEAN+6 GDP would fall by more than 8 per cent. Choose openness, and ASEAN+6 GDP would rise by up to 4 per cent.

Asia has made the right choice. The path of protectionism is costly. Almost 100 per cent of President Trump’s tariffs have been paid for by American citizens, plunging the poorest Americans into an even deeper poverty. President Trump’s misguided desire to reduce the US trade deficit has seen the deficit blow-out by more than a third. His trade war has forced the US Federal Reserve to cut rates in a desperate effort to ward off what the yield curve and financial markets are overwhelmingly predicting: a looming US recession.

The same protectionist, isolationist model is being implemented by Boris Johnson in the United Kingdom. The results do not surprise. Johnson’s desired hard-Brexit is forecast to break-up the United Kingdom and plunge it into recession. So desperate was he to become the Prime Minister of the United Kingdom, there’s a chance that Johnson may now be its last.

The countries pursuing this protectionist model have never been more divided. The global economy is suffering as a result.

The path that Asia has chosen to take could not be more different. RCEP is the green shoot in the otherwise deserted field. As the world divides, Asia has come together. To focus on the economic numbers — as impressive as they are — misses the point. RCEP is not just a trade agreement. RCEP is an economic cooperation arrangement. It brings together a group of countries some of which previously had no free trade agreement that linked them. It brings the region together in their common pursuit global interests and goals.

Even the holdout country, India, is a source of hope. India was slow to grasp the strategic significance of RCEP. But like ASEAN, Japan and other countries, it has now elevated RCEP as a strategic priority and an opportunity to boost its lacklustre growth. While India is yet to sign on, RCEP remains open to India and the likelihood of its joining in the future is high as the costs of staying out increase. Unlike TPP11, RCEP is open to new entrants. Commitments under RCEP are implemented gradually, allowing countries the flexibility they need to ease domestic adjustments and manage concerns.

However, the hope is also that RCEP will give the Asian economy and the world economy a boost and relocate the economic center further to the Asian pivot. In my opinion the slowdown of the world economic growth cannot only being refered to Trump´s trade war, but we have to include other factors:First after 10 years of boom since the financial crisis 2008 , there are some symptoms of overaccumultation of capital and overproduction in industries. The slowdown is also a effect of the normal cyclical crisis of capitalism as described by Marx in The Capital or Keynes or traditional macroeconomy. The present slowdown is caused at least by three contributing factors: First, the normal recession after a boom phase (cyclical crisis) , the politically induced slowdown by trade wars and third because of the beginning of digitalization.

But digitalization could in the mid and long term  contribute to a new long wave if you are a fan of Trotzki, Kontradieff and Schumpeter. A long wave would make the oscililations of the cyclical crisis weaker and have an overall upward effect for the longterm trend of the world economy, but could also bring new social and global inequalities and a restructuring of the world economy with some political and geopolitical backlashes. A part of China´s concept of the New Silkroad is also caused by an overaccumulation of capital (China became a net capital exporteur since 2013) and an overproduction crisis in industry.Therefore China tries to expand to its West and abroad and to find new markets. But the New Silkroad is not just an outlet for Chinese capital and industry, but also a gigantic global Keynesian-Rosseveltian New Deal with anticyclical infrastructure spending. This global  Keynesian New Deal will also have impact on the growth of the world economy as do freetrade areas like the RCEP have or the infrastructure project of the Quad (India, Japan, Australia, USA), the Asian-Africa Growth Corridor.

We are in a transition period to a new world order and the outcome is unclear. A new world architecture  could have different options and designs and appropriate institutions. A reform of the UNO, a G 20 centered new world order, a G ??? whatever, a totally new body, a pax chinoise instead of a pax americana, a multipolar world with cooperation between the poles,etc. Many new architectures are possible , but it is too early to favour one certain architecture, but it is better to have different options and always a plan B, C, D, E and F as the results of this transformation period can be different as today´s prognosis and expections. However, the forces of a Hobbesian world and great power „games“ are becoming stronger and especially the sinoamerican conflict will be decisive because the USA and China  are fighting about the No.1 status which even can lead to a devasting sinoamerican war.

Everybody thinks that Trump is just a business man who just wants an economic  deal with China. Most people think that it is just an economic issue about trade balances and underestimate the fundamentality of the sinomamerican conflict. In reality this deal would include making China the longterm No. 2 and probably Xi Jinping and the CP China won´t accept that status. Then the question will be what Trump will do if he doesn´t get his deal. Maybe he will escalate the sinoamerican conflict to a sinoamerican war , perhaps by a seablockade like Offshore Controll designed by US strategist TX Hammes or a mix of military operations with economic warfare as proposed by Michael O`Hannon in his new book „The Senkaku Paradox“. But that is a worst case scenario, but not that unlikely as it was a decade ago. And first Trump has to be reelected. If the Democrats seize power again, other options are on the table as a new TTIP (Gabor Steingart: „economic NATO“) or TPP or a revival of the West, multilateralism and free trade.

In his analysis „ How will shifts in US foreign policy effect Sout East Asia „, Daljith Singh comes tot he conclusion:

„•   A new phase in US foreign policy, in which China is viewed as a major threat to American economic and security interests, has begun under the Trump administration.

•   The strong anti-China sentiment is accompanied by efforts to “decouple” from China. If carried too far, they will alienate allies and friends whose cooperation the US will need in order to compete with China.

•   In the broader American foreign policy community, there is an intense ongoing debate on how strong the push-back against China should be. Both moderates and hawks agree on the need for a “tougher” approach but differ on the degree and method of toughness. No coherent strategy has been possible partly because President Trump’s thinking does not always accord with that of his own administration and partly because it is still too early in the day to come out with well-thought-out policies to support such a major change in foreign policy direction.

•   The ongoing adjustments to global policy and strategy will therefore continue as the security focus shifts to the Indo-Pacific region. The “Free and Open Indo-Pacific” concept provides some signs of the broad direction policy may take but its vital economic dimension is still missing.

•   There is greater recognition in Washington of the importance of Southeast Asia. Located in the middle of Indo-Pacific, it will be a contested zone between China and the US and its allies. The US will step up its public diplomacy to better promote its own narrative in Southeast Asia.

•   Under the Trump administration the importance of the South China Sea to the US has risen.

•   The US will remain a powerful factor in Asia despite Trump and problems at home. China is not on an inevitable path of dominance given its own significant domestic challenges“

The full text oft he study is available at Institute for South East Asian Studies (ISEAS) website.:

https://www.iseas.edu.sg/articles-commentaries/trends-in-southeast-asia

And if the USA should under a Democratic president restart TPP  to counter RCEP or get many RCEP countries and India in the TPP or another sort of free trade agreement or even join the RCEP, this would shift the Asian pivot maybe away from a sinocentric order and counter Chinese influence more effectivly than Trump does. However, as the Democrats try to portray Trump as puppet of Moscow and Mandchurian candidate of Putin, Trump fights back and tries to portay the Democrats as puppets of Beijing and Mandchurian candidates of Xi who sold out the USA and American jobs to the Chinese and that China wanted to topple him by a sinodemoctratic conspiracy. The multipolar world at its best. Since Mc Carthy we haven´t seen an election campaign which accuses the other side of being an agent of a foreign power.

It is also interesting to see, how Russia perpares for the coming new world order after the transistion period. The Russian International Affairs Council ( RIAC) besides bilateral projects with China, India, South Korea,etc. has different multilateral and regional projects. An Russia-Euroatlantic  project—seems to be Gorbatchev´s  and Jelzin´s vision of an economic and security architechture from Vancouver to Vladivostok, a  Russia-EU  project, an Greater Europe project-seems to be more the vision Putin had in his speech at the German Bundestag 2001 .An Eurasia project, but the clear meaning of Eurasia isn´t spelled out. Some Russian strategists think about distinguishing between Inner Eurasia Eurasia, Greater Eurasia, but the terms still have to be defined. Does Inner Eurasia mean a cooperation between the EEU and the EU as Dr. Walter Schwimmer ( IISES) proposes, with the establishment of an EU commisioner for EU-EEU cooperation and security or a union of former Sovjet republics or the SCO? Or would this already be Eurasia or Greater Europe?  And what would Greater Eurasia mean? A cooperation between Russia ( the EU) and the RCEP countries—with or without India? RCEP is not an economic union like the EU with a common market, 4 freedoms and institutions or like the EEU, neither a pure free trade area like Obama´s TPP . And India is still  hesitating to join the club under the existing conditions.

The EU and the EEU could technically much easier make a cooperation as both organizations have appropriate institutions. However, as RCEP has not institutions comparable to the EU and the EEU and India might not be part of  it, it might be more difficult to enlarge such a EU-EEU cooperation to a Greater Eurasia vision. And there is also a RIAC project Russia-Asia-Pacific which might have a different architecture for a new world order and maybe there will also be a Russia-Indo-Pacific project in the future. But the struggle between the USA and China for the No. 1 status will be decisive and play the dominant role in defining the outcome of the new world order and one should forget not Brzezinski´s „Chessboard“ and the main objective of US foreign policy: That the USA had to prevent the rise of a dominant Eurasian power or an Eurasian axis under all circumstances.Therefore a new world order which wanted to isolate, exclude or contain the USA might be a dangerous experiment. But Brzezinski had even bolder visions like a Trans Eurasian Security Structure (TESS) and an OSCEA (Organization for Security and Cooperation in Eurasia)–an OSCE together with Asia. which also never materilized.And Trump is doing his best to create an Eurasian bloc Brzezinski always tried to prevent.

Über Ralf Ostner

Ralf Ostner geboren 1964 in Frankfurt am Main, 1984 Abitur in Bayern--Leitungskurse: Physik und Kunst/ Schülerzeitung. Studium der Physik (Nebenfächer: Mathematik, Chemie), Wirtschaftsgeographie (Nebenfächer: BWL, VWL) und Studium der Sinologie. 1991 Abschluss als staatlich geprüfter Übersetzer in der englischen und chinesischen Sprache am Sprachen- und Dolmetscher-Institut/München (Leiter der Chinesisch-Abteilung: Herr Zhang, ehemaliger Dolmetscher von Deng Xiaoping und Franz-Josef Strauß).Danach 5 Jahre Asienaufenthalt: China, Indien, Südostasien (u.a. in Kambodscha während des ersten Auslandseinsatzes der Bundeswehr, Interviews mit Auslandschinesen, Recherche im Karen-Guerillagebiet in Burma, Unterstützung einer UNO-Mitarbeiterin während den Aufständen in Nepal und bei UNO-Arbeit in Indien), Australien. Danach 5 Jahre als Dolmetscher, Delegationsbegleiter und Übersetzer in München. Abendstudium an der Hochschule für Politik /München (Schwerpunkt: Internationale Beziehungen). Abschluss als Diplom-Politologe (Diplomarbeit: Die deutsch-chinesischen Beziehungen 1989-2000 unter besonderer Berücksichtigung der SPD-Grünen-Regierung). Delegationsbegleitung von Hu Ping, Chefredakteur der chinesischen Dissidentenzeitung "Pekinger Frühling" (New York)und prominentester Vertreter eines chinesischen Liberalismus bei seiner Deutschlandtour (Uni München, Uni Mainz, Berlin/FU-Humboldt) bei gleichzeitigem Kontakt mit Liu Liqun (Autor des Buches "Westliches Denken transzendieren"/ heute: Deutschlandberater der chinesischen Regierung).Chefredakteur der Studentenzeitschrift UNIPOL . Projekte am Goethe-Institut und bei FOCUS TV. Seit 2000 Übersetzer (chinesisch-deutsch), Graphiker, freier Schriftsteller und Blogger.
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