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BFI Perspectives 

  • Dirk Steinhoff

RCEP, the World's Largest Trade Pact Signed – a Reason to Celebrate?

While the western world has been focused on COVID-19, on the US presidential election - which may or may not have been fraught with irregularities - and on the mainstream media’s celebration of their new-found savior, Joe Biden, other parts of the world have been focused on business and trade. One of the most important stories that you might have missed was the recent signing of the RCEP, a free trade agreement in the Asian-Pacific region that has been in the making for a decade.


The Regional Comprehensive Economic Partnership (RCEP), is a historic free-trade agreement in the Asia-Pacific region between the ten ASEAN states (i.e. Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) and five of their FTA partners—Australia, China, Japan, New Zealand, and South Korea.


Building on existing free trade deals among members, the RCEP will expand and deepen trade linkages across the Asia-Pacific region, arguably facilitating ease of trade in goods and services, the flow of foreign investments, and enhancing regulatory protections in areas such as e-commerce and intellectual property.

The new free trade zone will be bigger than both the US-Mexico-Canada Agreement and the European Union. India was also part of the negotiations, but pulled out last year, over concerns that lower tariffs could hurt local producers. However, the door remains open for India to rejoin, RCEP leaders reiterated as they signed the deal.


At this point, the majority of mainstream media reports, and certainly the official statements of those states participating in the deal, are overwhelmingly enthusiastic about the agreement. In general, it is being celebrated as a next step of detachment from a US-centric and US-dominated world. It is being described as another nail in the coffin of America’s supremacy. And, of course, many are pointing to Trump and his tendency to restrain and limit his country’s multi-lateral involvement and funding of international organizations.


Beijing, of course, sees this agreement as another victory. China has been an active promoter of RCEP since day one. Then, as the U.S. retreated from the regional stage, Chinese leaders used that vacuum to portray Beijing as the reliable partner of choice for economic growth, trade, and investment.


However, the question is how good is this “deal” really for the region? It is a complex question. The short answer is: “It depends”. As in the Eurozone, there will be some winners and some losers. Ultimately, as with most multi-lateral agreements, you can quite reliably expect an increased level of decision-making power to be detached from the voters of the countries in the deal.


That situation is a matter of efficiency, many would argue. After all, if every citizen of every state in the agreement was to be asked whether they agree or not with every relevant decision, nothing would happen, and progress would be made at a snail’s pace. Some, including us, actually think that would be a blessing. However, the bureaucrats and politicians in charge beg to differ, and they will push forward with their plans for further centralization, more top-down control, and “efficient”, if not democratic, governance.


Over time, they will find themselves in the same rut as their western peers - more bureaucracy, more regulations, more state, more taxes...

“Civilizations die from suicide, not by murder.” ~ Arnold Joseph Toynbee

Ultimately, history will show whether the path of globalization, concerted governance and less democracy is the right one for humankind. But, in America, as in Switzerland, the free-market system that was based originally on the fundamental idea that government needs to be limited and restricted, with its ultimate task to defend and further our individual and inalienable rights, has proven very successful. And yet, today we seem all too willing to go along with the dismantling of that system.


This trend toward more collectivism and centrally regulated conformism is one of the aspects of multi-lateral agreements and supranational regulations that, in our view, is dangerously underestimated. Once the decision-making power is removed from the people that are affected by those decisions, it is basically impossible to reclaim it.


We know a thing or two about that in Switzerland: we fought long and hard to attain and maintain self-determination and independence. And we have fared very well with our system of direct democracy. It is puzzling to see how much adoration some people have for a centrally organized reign of non-elected bureaucrats in Brussels, or as discussed here, for another mutli-nation mega-market that may well lead to the same “progressive” path we are witnessing in America and in the EU.


>> Read more here.

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