Regional trade agreements will reorient East Asian economies away from the US

Peter A. Petri (PIIE) and Michael G. Plummer (Johns Hopkins University and East-West Center)
June 16, 2020

The withdrawal of the United States from the Trans-Pacific Partnership (TPP) left East Asia’s trade agreements inward looking and will accelerate the region’s economic decoupling from the United States.

The withdrawal of the United States from the Trans-Pacific Partnership (TPP) left East Asia’s trade agreements inward looking and will accelerate the region’s economic decoupling from the United States. The Regional Comprehensive Economic Partnership (RCEP) and the revived Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will lower East Asian trade costs, creating a more regionally focused, China-centric East Asian economy.

Similarly, without India the 15-nation RCEP will establish a vast regional trade bloc with prominent roles for China, Korea, and Japan. As these nations expand their production networks, build interconnected innovation systems, increase collaborative manufacturing, and develop mutual trust in supply chains, the United States stands to lose economic and political clout in the region. The agreements originally sought to limit China’s influence, but without the balancing influences afforded by the United States and India, they will enhance rather than limit China’s outsized influence in regional decision making.

This PIIE Chart was adapted from Peter A. Petri and Michael G. Plummer’s working paper, East Asia decouples from the United States: Trade war, COVID-19, and East Asia's new trade blocs.

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