Future of Trading Architecture in Asia Pacific: TPP vs. RCEP

Two large regional economic arrangements are currently vying each other in the Asia-Pacific region: the US-led TPP(Trans-Pacific Partnership) and the ASEAN-centered RCEP (Regional Comprehensive Economic Partnership). The TPP pursues a high-standard agreement, while the negotiating objective of the RCEP is modest, focusing on tariff cuts with flexibility. Whether the two competing trade blocs will converge into a region-wide FTA, or will become mutually exclusive will determine the future of trading architecture in the Asia Pacific. Among the two possible scenarios, however, the fragmented scenario is more likely. This will cause huge inefficiency cost to the business sector, and undesirable political tension between the two superpowers. To avoid this scenario, countries participating in both the TPP and RCEP need to put greater efforts to make the frameworks of the two FTAs become similar, keeping in mind a possibile synthesis in the future. ASEAN countries should also assume an active role in keeping up with their pledge of “the ASEAN centrality,” since a fragmented scenario would run counter to the concept and is eventually detrimental to the ASEAN community. Rivalry between the U.S. and China might become the major determinant in shaping the future of regional economic architecture. The two powers should demonstrate their political leadership to pave the way for the desirable institution in the Asia-Pacific region.