The clumsily named Regional Comprehensive Economic Partnership trade deal to which we have just signed on is just about worth doing, important in a modest way symbolically, and useful in its timing.
To describe it as the “world’s largest ever trade deal” is utterly ridiculous and beyond the wildest imaginings of Yes Minister.
It will give government boosterism a bad name.
It will also damagingly associate trade deals with flim-flam rhetoric.
After all, if this was the biggest trade deal ever, ushering in the biggest trade bloc in history, you would be keen to know which trade barriers to our exports would now fall.
Answer? Absolutely none.
RCEP involves 15 nations. Australia already has free-trade agreements with every single one of them. Indeed, with several of them we have numerous free-trade agreements. We have a free-trade agreement with Singapore, for example. We also have a free-trade agreement with the Association of Southeast Asian Nations, of which Singapore is a member. RCEP makes some useful changes in standardising rules across its 15 members and may even lead to some increase in services trade.
Is everybody actually going to obey these rules?
Let’s talk about the elephant in the room.
China and Australia are both members of RCEP. That means we are both committed to providing exactly the same rules for the way trade is done with all RCEP members.
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Yet this year Beijing has been taking one export product of Australia to China after another and slapping ridiculous and unjustified restrictions on their entry into the Chinese market.
Is Beijing going to stop this behaviour because of RCEP?
If you are such an outrageous cynic as to think the answer to that question is possibly no, then what exactly does RCEP achieve?
Simpler forms written in better English for agricultural exports to Myanmar, I suppose.
Worth having, nothing to write home about.
The big achievement of RCEP is symbolism and timing, and for Australia the fact that in any regional trade agreement at all, it’s better to be on the inside than on the outside.
Global trade is under a lot of stress at the moment, mainly because of COVID-19 but also because quite a lot of nations don’t play by the rules, and the biggest nation, the US, has recently decided that the rules are being gamed against it.
So any agreement, however modest, that moves the trade train forward, no matter how minutely, is better than standing still or going backwards.
RCEP is described as the biggest trade agreement in the world because it covers such big economies — China, Japan, South Korea etc. But that’s like a carbon tax that covers the whole economy but is levied at 1 cent per tonne of carbon. It is both the biggest possible tax, because it covers the whole economy, and also negligible, because its economic effect on the economy is nil.
Beijing has made a big deal of selling RCEP as a big deal, partly because the Americans aren’t involved. China was not involved in the far more consequential Trans-Pacific Partnership because it could not sign up to the type of legal and transparency rules involved in the TPP. Originally, the TPP was thus, in part, a US play against Beijing.
But the Obama administration was dilatory and cowardly and hopeless about getting it concluded and ratified (how surprising), and then the incoming Trump administration withdrew from it altogether.
So Beijing was able to say: look, the US initiative fell over, but our favoured regional deal will go ahead.
But the question about RCEP is: where’s the beef, Jack?
RCEP allegedly addresses issues of intellectual property.
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Yet everyone in the national security community, and in most Australian big businesses, will tell you of relentless Beijing-backed cyber-intrusion and IP theft.
No agreement in this area has ever hampered Beijing in the past. RCEP will be historic if it is the exception, but there is absolutely no reason to think it will be.
Instead, it might possibly, conceivably, perhaps result in marginally less threat to Australian IP in Myanmar. Well and good.
It is also a plain contradiction that RCEP envisages ever greater integration of regional supply chains whereas Australia and all its allies are moving to disentangle their supply chains from China in key and strategic products.
None of this is remotely a criticism of the Morrison government. The Coalition government under all three of its prime ministers has a magnificent record in concluding real, substantial FTAs.
Simon Birmingham has been an eye-catchingly good Trade Minister.
But the real trade action these days is not with big multilateral agreements, but rather with bilateral agreements and groups of like-minded countries.
Nonetheless, to expect a government not to crow excessively over any good news it’s involved with is to ask for what the theologians call an angelic disposition.
We have a government of good men and women but certainly not angels.
RCEP is useful in some ways, but really pretty marginal.