Can RCEP and the TPP be Pathways to FTAAP?

Abstract

The Regional Comprehensive Economic Partnership (RCEP) and Trans-Pacific Partnership (TPP) negotiations could create way-stations toward the Free Trade Agreement of the Asia-Pacific (FTAAP). They could yield new, regionally acceptable rules and facilitate experimentation with and adjustment to deeper integration. However, neither negotiation includes both China and the United States and would thus fall well short of potential regional free trade. One or the other agreement might be enlarged to achieve region-wide integration. If not, a new FTAAP agreement might be developed to complement RCEP and the TPP. Such an agreement could set high standards, encourage liberalization across the region, and lead to tiered rules for economies at different stages of development. The paper explores these negotiating pathways and estimates gains from them. The benefits and challenges of a region-wide agreement are large.

Keywords: Trans-Pacific Partnership, Asian economic integration, U.S. trade policy, free trade areas, regional economic integration

JEL Classification: F12, F13, F14, F15, F17