At a press conference this week, US President-elect Joe Biden affirmed his administration would seek to take the lead in setting the rules for trade in the Asia-Pacific region and beyond, not leaving the work to China.
He said the US, which makes up 25 percent of the world’s economy, needed to be aligned with other democracies so that it could “set the rules of the road instead of having China and others dictate outcomes because they are the only game in town.”
His remarks came a day after South Korea and 14 other Asia-Pacific countries signed a free trade deal known as the Regional Comprehensive Economic Partnership. The multilateral pact also involves 10 member states of the Association of Southeast Asian Nations, Japan, Australia and New Zealand
If it comes into effect after being ratified by the signatories, RCEP will become the world’s single-largest free trade zone covering a third of global gross domestic product, trade and population.
In their joint statement, the leaders from the 15 RCEP participants said it represented an “important step forward toward an ideal framework of global trade and investment rules.”
Economists predict that the deal, the first trade accord bringing together China, Japan and South Korea, could add almost $200 billion annually to the global economy by 2030.
South Korea is set to be among the greatest beneficiaries from the RCEP agreement, which marks the first step toward Asia’s integration into a coherent trading zone. A local research institute recently forecast the country’s gross domestic product would grow by 0.41-0.51 percentage point additionally over a decade after the accord comes into force.
But the RCEP launch could put Korea in a further awkward position amid an intensifying rivalry between the US and China.
The deal will give China a significant voice in setting standards for regional trade. China’s premier, Li Keqiang, described the accord as “a victory of multilateralism and free trade.”
Biden’s remarks at Monday’s news conference suggest again his administration will be as resolute as his predecessor Donald Trump’s administration in keeping China’s rising influence in check. His emphasis on cooperation with US allies and partners based on international norms, contrary to Trump’s unilateral approach, may make it harder for Seoul to maintain strategic ambiguity between the two superpowers.
Cheong Wa Dae officials hailed the signing of RCEP as a “core result” of the Moon Jae-in administration’s New Southern Policy aimed at enhancing ties with Southeast Asian nations and an opportunity for Korea to become a “pacesetting” economic power.
President Moon was quoted by his spokesman as saying that he’s sure that it will “contribute to the recovery of multilateralism and the development of free trade around the world, beyond the region.”
This upbeat tone, which contrasts with Biden’s negative view of the RCEP agreement, led some critics to worry the Moon government could be out of step with the next US administration at the expense of undermining Seoul’s core interests.
South Korea now needs to be more careful and flexible in preparing for Biden’s plan to enable the US to take the lead in setting global trade rules.
At the press conference, Biden said he had a “pretty thorough plan” that will be announced on Jan. 21, the day after his scheduled inauguration.
Biden has not yet mentioned on whether his administration will move to rejoin another free trade deal encompassing a dozen Pacific Rim nations.
Negotiations on the Trans-Pacific Partnership agreement were concluded in 2015 at the initiative of then-US President Barack Obama’s administration, in which Biden served as vice president. After Trump withdrew the US from the accord shortly after he took office in 2017, Japan led the other remaining members to launch the Comprehensive and Progressive Agreement for Trans-Pacific Partnership two years later.
Korea has been reluctant to join a trade framework for the Pacific Basin that excludes China.
Experts expect a Biden administration to seek to join the CPTPP after revising some provisions or to build a new multilateral trade arrangement to serve as a counterweight to RCEP.
This move would make Seoul’s passive position on a trade pact excluding China harder to maintain. It may not be long before Biden’s emphasis on the US being aligned with other democracies turns into an ultimatum for Seoul to decide whether it will stand by Washington in its push to build a network of allies and partners sharing free-market values.