**U.S. on Sidelines as China and Other Asia-Pacific Nations Launch Trade Pact**
**The Regional Comprehensive Economic Partnership will eventually eliminate more than 90% of tariffs on commerce among 15 member countries**
**by Yuka Hayashi, The Wall Street Journal, 1/1/2022**
**China joins U.S. allies including Japan and Australia in a new Asia-Pacific trade agreement that launches Saturday—with the U.S. watching from the sidelines.**
**The new Regional Comprehensive Economic Partnership, or RCEP, will eventually eliminate more than 90% of tariffs on commerce among its 15 member countries, in what economists say will be a boon to trade in the region.**
**It will also give China a more prominent role in setting rules of trade in the Asia-Pacific region at the expense of the U.S., according to some analysts....**
**The U.S. wasn’t invited to participate and said it wouldn’t have joined anyway because the agreement was considered too weak, lacking requirements for labor and environmental standards....The agreement comports with China’s interests, including weak rules on intellectual property rights, and none whatsoever on state-owned enterprises....** [end quote]
The other member nations of the RCEP are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand and Vietnam. With RCEP members accounting for 30% of global population and gross domestic product, the partnership becomes the world’s largest regional trade agreement.
Japan, South Korea and Australia are strong U.S. allies and trading partners. The RCEP will link them more closely to China.
The U.S pulled out of the Trans-Pacific Partnership, which excluded China, in 2017 and has not returned.
China claims to be a communist country, but in fact it’s a mercantile power following bare-knuckle capitalism under an authoritarian government.
Requiring labor and environmental standards that would raise costs of business in the other members. American companies outsource manufacturing precisely because lower standards provide lower costs and higher profits. The other countries benefit by getting jobs even though their workers and environment suffer.
China is moving aggressively to solidify its advantage in the world trade sphere. This is a quiet but potentially important Macro trend in undermining the U.S. as the world’s largest economy.