Asia-Pacific FTA


There are important lessons for Pakistan to learn from the formation of the world’s largest free trade bloc in the Asia-Pacific region. A total of 15 countries (10 Asean nations plus five more) have got together and signed a landmark free trade agreement (FTA) in a decisive win for multilateralism, especially in this region, at a time when the world’s sole superpower is doing what it can to kill multinational deals in favour of aggressive bilateral arrangements. It is even more telling that the Chinese are at the centre of this deal, called the Regional Comprehensive Economic Partnership (RCEP), while the Americans have no part in it.
Perhaps there could have been no better farewell gift from President Xi Jinping to President Donald Trump. The latter’s four years in office were typified by hostility towards China, which came to the fore in the form of the reckless tariff war that not just harmed both the American and Chinese economies, but also disturbed supply chains across the world since China, the world’s workshop, was cut out of international markets because of American pressure. And the more the White House spewed venom on the Chinese and their way of doing business in the world the more President Xi was encouraged to just keep his head down, rather than indulge in needless dialogue, and look for ways to strengthen the Chinese economy as the whole world struggled with the financial impact of Covid-19.
Now China is at the centre of the biggest FTA the world has ever seen despite Washington’s efforts to take the shine off such deals permanently and the fact that US Secretary of State Mike Pompeo only recently visited the entire region and warned everybody against entering into any partnerships with Beijing. Clearly the world has decided to pretty much ignore what comes out of Washington till there is a more balanced government in the White House. Whether or not that break will come with the Biden administration will become apparent very soon. While there is an urgent need to get back to business as usual with the Chinese so the whole world can begin to get back to normal, the new president will face a lot of domestic pressure regarding outsourcing jobs once again. So much rather than wait for America to figure things out the Chinese have very wisely decided to carve out their own niche in in the Asian region. Even American allies are part of the China-centric deal. Pakistan must realise the potential of trade-driven earnings from all this and get its export industry back in shape as soon as possible.