By Matt Goodman
All roads may no longer lead to Rome, but someday they may lead to the FTAAP (Free Trade Area Asia Pacific). In addition to the Trans-Pacific Partnership (TPP), the other main route to the APEC vision of free trade is the Regional Comprehensive Economic Partnership (RCEP), which brings together the 10 ASEAN nations plus China, Japan, Korea, India, Australia, and New Zealand—economies with a combined GDP of $21 trillion. Launched at last November’s East Asia Summit in Phnom Penh, RCEP held its first substantive round of talks last month and is scheduled to conclude by the end of 2015.
Compared to TPP, the standards and degree of liberalization sought in RCEP are low; the founding document emphasizes the “individual and diverse circumstances” of its members, and provisions on labor rights, intellectual property, SOEs, and other behind-the-border issues will either be left out or only lightly addressed. This will ease the burden on negotiators tasked with brokering an agreement that can find favor in capitals from Delhi to Seoul. Despite its low standards, RCEP could produce significant economic gains; one estimate puts the potential annual benefits to the world economy at $644 billion in 2025.
Even better, if the TPP and RCEP tracks eventually meet at a region- wide FTAAP, the gains could be as high as $1.9 trillion— real money by any standard.
Matthew P. Goodman is senior vice president and William E. Simon Chair in Political Economy at CSIS, with particular emphasis on Northeast Asia.