Australia and the Realpolitik of Trade in the Asia Pacific
October 5, 2012
Australia is seeking a practical and effective path to regional economic integration in the Asia Pacific. For reasons both commercial and strategic, Australia would like the United States to be part of that effort.
As in other Asia Pacific countries, trade is at the core of Australia’s future prosperity and security. For that reason, it cannot risk placing only one bet—on the Trans-Pacific Partnership (TPP).
The United States should not begrudge its treaty ally for tabling other models that would encourage the United States to stay with the TPP but also allow Australia to pursue another vehicle, the Regional Comprehensive Economic Partnership (RCEP), that is open to ASEAN and all countries with which ASEAN has a free trade agreement (FTA). These FTA partners include China, India, and Japan. The United States, too, could seek to join the RCEP, either by signing an FTA with ASEAN or under the agreement’s open accession to “other external economic partners.”
For much of the last two years, discussion of regional trade liberalization in the Asia Pacific has focused on the ongoing negotiations in the TPP. The TPP is technically and politically ambitious, seeking to establish a high-standard, legally binding regional trade agreement that will effectively create a free trade and investment union in the region that all members of the Asia Pacific Economic Cooperation (APEC) grouping can eventually join. The TPP is often described as a U.S.-led initiative, although the truth is that the United States joined well after the TPP had been initiated by other, more aggressively trade-focused nations.
However, Australia and other Asian nations have recognized the need for a more wide-reaching and frankly less comprehensive trade opening vehicle that would include the engines of growth in Asia—namely, what Indonesian investment board chair Chatib Basri recently called “the three pillars of Asian growth: Greater China, Greater India, and Greater Indonesia.” The latter, he clarified, meant all of ASEAN. Notably, only 7 of the 10 ASEAN countries that are in APEC are eligible for TPP membership. India is also ineligible for membership in the TPP under the current criteria.
What Australia and other important U.S. partners such as Singapore are seeking is an Asia Pacific trade integration model that could include all members of the East Asia Summit (EAS), including the United States, China, India, and all of ASEAN.
China’s favored vehicle to drive what it considers East Asian economic integration, within its self-defined area of predominance, is the ASEAN + 3 forum. This grouping fits well with a Chinese geostrategic narrative that presupposes China’s predominant role in East Asia and tolerates other regional discussions such as the EAS and APEC, but regards them as secondary priorities. The rest of Asia is rightly concerned about limiting its trade and investment bets to a China-led model, especially after Beijing has been willing to use commercial leverage to turn the screws on its neighbors over maritime and territorial disputes.
In this context, it was not surprising that officials attending September’s APEC summit in Vladivostok renewed the push for another vehicle: the Regional Comprehensive Economic Partnership. RCEP would be open to all EAS members except, at least for now, the newest members—the United States and Russia. No leaders have yet officially endorsed the agreement, but all potential members—the ASEAN member states plus China, Japan, South Korea, Australia, New Zealand, and India—have signaled they are likely to sign up, and negotiations will begin in November.
The United States should take heed of the friendly advice from Australia and seek to join the RCEP. The RCEP need not be competitive with the TPP, and it fills the strategic gap that exists between U.S. strategy and U.S. trade policy in the Asia Pacific. The United States has placed a strategic emphasis on an ASEAN-based regional architecture and strengthening key relationships around Asia—the “rebalancing”—but its ideological trade policy is focused on the TPP and APEC, neither of which includes all the ASEAN countries (Cambodia, Laos, and Myanmar are excluded) or India.
To close that gap and establish a strong foundation for substantive and balanced engagement in Asia, the United States should seek to join the RCEP negotiations alongside a reinvigorated TPP effort. The TPP could set a high standard for the RCEP and APEC economies to aspire to, and joining the RCEP would give the United States a trade and economic vehicle to drive at the EAS leaders’ meetings.
If the United States does not join the RCEP, the White House should prepare for an awkward moment at the EAS when presidents Barack Obama and Vladimir Putin are asked to step out of the room while the rest of the Asia Pacific leaders move forward on economic integration and line up for the RCEP photo op.
Opponents of U.S. consideration of the RCEP will say that the Office of the U.S. Trade Representative does not have the bandwidth or the staff to seriously participate in another set of negotiations. That is a problem that can be solved by prioritizing Asia and trade—a paradigm shift much needed after the U.S. elections in November.
What Australia and many of the United States’ best friends in Asia long to see is a U.S. president who will talk with Americans about the long-term importance of Asia to the core interests of the United States. Speeches by the president made in middle America about why trade and security engagement in the Asia Pacific matters to every American family—in terms of jobs, economic prosperity, innovation, and a safe and secure future—would answer the questions in the region about the sustainability of the United States’ stated rebalancing toward the Asia Pacific.
(This Commentary originally appeared in the October 2012 issue of Pacific Partners Outlook.)
Ernest Bower is codirector of the Pacific Partners Initiative and the Center for Strategic and International Studies (CSIS) in Washington, D.C. Maria English is a researcher with the CSIS Pacific Partners Initiative.
Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
© 2012 by the Center for Strategic and International Studies. All rights reserved.