By The Rio Times | Created at 2024-11-25 09:34:07 | Updated at 2024-11-26 14:29:51
1 day ago
As geopolitical tensions rise and supply chains face disruption, Asian and Pacific leaders advocate for stronger regional economic integration. This movement comes in response to the protectionist policies of U.S.
President Donald Trump, who has made tariffs a central theme of his successful 2024 presidential campaign. Trump proposed imposing general tariffs of up to 20% on U.S. imports and a hefty 60% on Chinese goods.
During the recent Asia-Pacific Economic Cooperation (APEC) forum in Peru, leaders from the 21 member countries emphasized the need to bolster regional economic ties. China and Peru signed a more comprehensive trade agreement, while Indonesia entered into a trade pact with Canada.
Singapore’s Prime Minister, Lawrence Wong, underscored the importance of revitalizing the Asia-Pacific Free Trade Area, an APEC initiative still in progress. “APEC is more relevant now than ever,” Wong stated.
Economists suggest that trade agreements excluding the U.S. will gain significance for Asian nations in the coming years. These agreements include the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Asian Nations Forge Regional Alliances Amid Rising Tariffs. (Photo Internet reproduction)Deborah Elms, director of trade policy at the Hinrich Foundation, noted that these agreements could help. They aim to manage the chaos resulting from global system disruptions.
The RCEP and Shifting Dynamics in Global Trade
The RCEP, a trade agreement among 15 Asia-Pacific nations including China, Japan, South Korea, and ASEAN members, was finalized during the U.S.-China trade war. It was signed in November 2020 after eight years of negotiation.
These countries collectively account for about 30% of global GDP. Trump’s withdrawal of the U.S. from the Trans-Pacific Partnership in 2017 left Japan to lead the pact, now known as CPTPP.
This group of 11 countries, including Canada, Australia, New Zealand, Singapore, and Vietnam, is nearing its sixth year of operation. Trade among members rose by 5.5% from 2018 to 2021.
The United Kingdom will join in December, with China and Taiwan also expressing interest in membership. In light of Trump’s anti-globalization stance, some analysts urge Japan to update the CPTPP by adding members and enhancing cooperation with the European Union.
A Chinese delegate at APEC highlighted the country’s numerous trading partners. However, they acknowledged that China’s economic policies might hinder regional trade cooperation.
As Beijing grapples with manufacturing overcapacity, it increases exports to countries like India and ASEAN nations. This challenges the growth of their export-oriented industries.
The Impact of U.S. Tariffs on Regional Trade
To boost regional trade, China must stimulate domestic consumption and increase imports, according to Priyanka Kishore of Asia Decoded consultancy. “China plays a crucial role in supporting external demand in the region,” she stated.
Higher U.S. tariffs pose significant challenges for Asian economies such as Singapore, Hong Kong, Vietnam, and Taiwan, where trade exceeds 100% of GDP. Currently, Singapore and South Korea are the only Asian nations with free trade agreements with the U.S.
Tariffs are paid by U.S. importers and collected by U.S. Customs and Border Protection. While higher costs might be passed on to consumers, tariffs can also hurt foreign countries by making their products less competitive in the market.
Research by Yang Zhou from Fudan University indicates that the 2018 trade war cost China $35 billion and the U.S. $15 billion. Global Trade Alert analyzed how Asian countries might cope if denied access to the U.S. market entirely.
The study found it would take an average of five years for these countries to find alternative trading partners. Thailand would face a particularly daunting task, needing 24 years to replace U.S. partnerships with those in China, the EU, Vietnam, and Japan; South Korea would need until 2038.
