Countering trade protectionism

RCEP establishes common rules, strengthens confidence in multilateral trading order

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KARACHI:

The US is vigorously pursuing hegemonic protectionism in international trade and supply chain, while adopting a tariff regime that supports its own industries and diminishes business opportunities for others.

In this situation, many countries are becoming way more eager to strengthen economic blocs such as the Regional Comprehensive Economic Partnership (RCEP), aimed at cherishing trade interests and bolstering the respective economies.

In August 2012, 16 ministers of different economies endorsed rules and objectives for negotiating the RCEP. Negotiations were held by leaders of 10 Association of Southeast Asian Nations (Asean) member states (Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and six Asean free trade agreement (FTA) partners (Australia, People's Republic of China, India, Japan, South Korea, and New Zealand) during the 21st Asean summit and related summits in Phnom Penh, Cambodia in November 2012.

The RCEP negotiations covered trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement, electronic commerce, small and medium-sized enterprises (SMEs) and other issues.

The economic partnership framework has the potential to deliver significant opportunities for businesses in the East Asia region, given the fact that the 16 RCEP participating countries account for almost half of the world's population, contribute about 30% of global GDP and over a quarter of world's exports.

SMEs (including micro-enterprises) make up more than 90% of business establishments across all RCEP participating countries and are important to every country's endogenous development of the economy.

According to CGTN, the RCEP, which came into effect in 2022, offers an alternative to the hegemonic selection, aims to eliminate tariffs on over 90% of goods traded among RCEP states, establishes common rules for trade, intellectual property and e-commerce, and strengthens confidence in an open rule-based multilateral trading order.

Countries with less advanced technology can learn from China's progress, and unlike the US, China, with its win-win ideology, does not artificially constrain anyone. It also does not prevent members from trading with others – sovereignty is the key.

Development for all is desired by China and the RCEP; not a world of "haves" and "have-nots." As the hegemonic order looks on, the RCEP region will become a model they must emulate. They will, in turn, be compelled to invest more in this region and "join the game" at fair terms, rather than control it or tip the board over.

The old Western-inspired order, which constantly decries China as a danger to their systems and livelihood, will inevitably be forced to re-evaluate its attitude. Reality will expose media lies as they recognise China is not a threat but a partner; one with which neighbours willingly collaborate and one that upholds the multilateral principles once championed by the West.

The Economist reports the incoming economic team of Donald Trump is dubbed unusually large, ranging from business tycoons to academic iconoclasts. They are divided into three categories including conservative mainstreamers, America first proponents and tech magnates. They will shape Trumponomics and reshape the US economy. If managed poorly, they could bring about chaotic governance.

Regional Expert and Centre for South Asia & International Studies (CSAIS) Islamabad Executive Director Dr Mehmoodul Hassan Khan said it seems Trumponomics will badly damage the true spirit of a just, equitable, free and fair international economy and erode the spirit of economic globalisation and international cooperation because of unilateral sanctions and high tariffs, reflecting the worse shape of the US hegemonic protectionism.

On the other hand, the RECP stands for free trade, removal of trade barriers and jointly achieving progress, prosperity and regional peace through greater socio-economic integration.

Definitely, international chains will also be in the line of fire because of the high tariff policy of the US as many businesses heavily rely on international manufacturing and supplier networks to operate successfully, where China has a major role and is dubbed the manufacturing machine of the world.

Thus, exploring alternative supply sources, mapping out supply chains, assessing the feasibility and costs of switching suppliers, evaluation of potential demand shifts, validation of shifts in strategy, rebalancing portfolios, revising operating footprints, and optimising supply chains, talent practices, and technology would be an ideal policy to counter the imminent high tariffs.

Chinese policymakers are following a holistic and comprehensive policy of regional economic reconciliation and political readjustments through sincere efforts. In this regard, it is streamlining derailed bilateral relations with Japan, South Korea and even Vietnam to mitigate or minimise the socio-economic, geopolitical and geostrategic ramifications of Trump's high tariffs and new tools of trade war.

There is no need to respond as an eyeball to eyeball syndrome or strategy. Every country, continent and organisation is now chalking out a different strategy to counter the US tariff threats.

The ongoing expansion of BRICS with the most recent inclusion of Indonesia, Malaysia, Thailand, Kazakhstan, Uzbekistan, Belarus, Bolivia, Cuba and Uganda speaks for itself. So, the message is loud and clear that an expanded BRICS would be a new driving force to further strengthen the Global South, developing and under-developed countries, headed by China and its economy.

Asia-Pacific has become a new flashpoint because of the ongoing China containment policy of the West, mainly in South China Sea; therefore every country is playing a wait-and-see game.

"Since we live in an integrated world of interdependencies, biased economic globalisation dominated by Western geopolitics instead of geo-economics, and protectionism instead of global prosperity, being the all-weather friend of China, it is feared that Pakistan's economy, security, industrial productivity, manufacturing capacity, IT exports, agriculture, textile and other sectors would be in trouble under the new trade war," Khan said.

"There would be a series of diplomatic pressures on the Belt and Road Initiative (BRI) member countries mainly in Africa, Central Asia, Southeast Asia and Middle East to quit the Chinese economic domain," he said.

The writer is a staff correspondent