The RCEP: Great Power Competition and Cooperation over Trade

Abstract

Despite being the largest free trade agreement (FTA) in the world, the Regional Comprehensive Economic Partnership (RCEP) is often criticized as a shallow FTA. In this essay, however, we contend that the RCEP is better understood in the context of the great power rivalry between the United States and China. We argue that the RCEP marks China’s rise as a shaper of trade law norms and governance mechanisms, which intensifies great power competition. On the one hand, by solidifying the world’s largest regional trading bloc, including through enacting very liberal rules of origin, the RCEP tightens ties among Asian economies and counters the efforts of the US to divert supply chains away from China. On the other hand, the inclusion of new rules on issues like e-commerce in the RCEP illustrates the potential for some cooperation between the two countries over the governance of the emerging digital economy, despite considerable challenges. The essay concludes with thoughts on the options for the new US administration in dealing with China.

Keywords: Regional Comprehensive Economic Partnership, digital trade, rules of origin, global supply chains, US-China competition