FX.co ★ China to benefit from termination of TPP agreement

Analysts expect that the United States will terminate the Trans Pacific Partnership Agreement after Donald Trump’s inauguration. As a result, the biggest trade deal is under risk of collapse.

If the US withdraws from the agreement, China will vigorously promote the Regional Comprehensive Economic Partnership, negotiations on which were initiated in far 2012. However, due to inner disputes between its members, the future of the RCEP is also unclear.

The RCEP is a free trade agreement between the Association of Southeast Asian Nations and six other countries including China, Japan, South Korea, Australia, New Zealand and India. At the same time, the Trans Pacific Partnership Agreement comprises a number of provisions which are not incorporated into the RCEP. In particular, there are no provisions about labor standards, protection of environment, and anti-corruption efforts.

The Regional Comprehensive Economic Partnership agreement was due to be finalized in December 2016, but this date was postponed until late 2017. The most stubborn member of this partnership is India which is reluctant to let outsiders into its domestic market.

Once China succeeds in promoting the RCEP, Beijing’s influence among Asian countries will increase significantly. Nowadays, China is already the major trading partner for many states of the Asia region. Besides, the importance of such projects as the Asian Infrastructure Investment Bank (AIIB) and the New Silk Road is growing.