Beyond Tariffs: The Deeper Impacts of the TPP and RCEP Agreements

Introduction

The Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP) emerged as two pivotal trade agreements in the Asia-Pacific region. Both were designed to lower trade barriers, boost economic growth, and enhance investment opportunities among member nations. However, the two regional trade pacts differ in scope, coverage, and participating countries.

The TPP was initiated by the United States under former President Barack Obama to eliminate about 18,000 tariffs across 12 Pacific Rim economies, excluding China. It aimed to foster greater market access across the Pacific while offering strong protections for the environment, workers’ rights, and intellectual property. However, the U.S. withdrew from the TPP in 2017, leaving the agreement in limbo.

Alternatively, the RCEP was formed in response to expand trade relationships in the region, with China taking the lead. As the largest regional free trade agreement to date, the RCEP encompasses 15 Asia-Pacific countries, including 10 ASEAN members along with China, Japan, South Korea, Australia and New Zealand. It focuses on reducing tariffs, facilitating investment and services trade, and enhancing the region’s business environment.

In essence, while the TPP and RCEP share common goals of promoting trade and economic growth, they differ significantly in membership, depth of coverage, and specific focus areas like intellectual property, e-commerce, and labor rights.

TPP Overview

The Trans-Pacific Partnership (TPP) was a major regional trade agreement in the Asia-Pacific, comprising 12 nations and originally led by the United States under President Barack Obama’s administration. The agreement was signed in 2016 after years of negotiations, but did not enter into force due to the U.S. withdrawal in early 2017.

The 12 original signatories were Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the United States. Together these nations represented approximately 40% of global GDP and about a quarter of total trade at the time.

The TPP aimed to promote economic growth by eliminating tariffs and non-tariff barriers to trade and investment between member countries. If ratified, the deal would have created the largest free trade area in the world. The partnership also sought to establish high standards for labor rights, environmental protection, and intellectual property rights.

RCEP Overview

The Regional Comprehensive Economic Partnership (RCEP) is a mega regional trade agreement signed in 2020 by 15 Asia-Pacific countries including China. Formed as an alternative to the Trans-Pacific Partnership (TPP), the RCEP creates the world’s largest trading bloc, accounting for nearly one-third of global GDP and population.

The RCEP aims to promote business and investment within the bloc by slashing tariffs, opening up trade in services, facilitating investment flows and establishing common rules. It builds on existing free trade agreements between ASEAN members and trade partners like China, Japan, South Korea, Australia and New Zealand.

While not as comprehensive as TPP in addressing labor, environmental and intellectual property protections, RCEP represents an important step toward deeper economic integration in the Asia-Pacific region. By bringing major economies like China, Japan, and South Korea into a common framework, RCEP helps advance regional trade liberalization amid rising protectionism worldwide.

Membership

The TPP initially included 12 Pacific Rim nations, intentionally excluding China. The agreement was advocated and led by former President Barack Obama and the United States.

On the other hand, the RCEP consists of 15 Asia-Pacific nations, including China. While the U.S. championed the TPP to counterbalance China’s influence, China has taken the lead in negotiating the RCEP.

Overall, a key difference is that the TPP specifically omitted China, whereas the RCEP intentionally includes China along with the rest of the Asia-Pacific.

Goals

The TPP and RCEP share similar overarching goals, despite their differences. Both agreements were formulated to reduce trade barriers, boost economic integration, and promote inclusive economic growth among members.

Specifically, the TPP sought to slash over 18,000 different tariffs across diverse sectors, foster market access and integration, and unlock export and job opportunities. It aimed to cultivate seamless trade and commerce across the Pacific.

Likewise, the RCEP has an expansive scope to diminish trade barriers and enable smoother flow of goods, services, investments and more. Its goals centered on forging better business ties, increasing market access, enhancing regional supply chains, and driving economic growth.

So while the TPP and RCEP vary in their specifics, they are united in their broad goals of dismantling trade barriers, integrating markets, strengthening commerce and business, and ultimately fueling greater prosperity. Both accords placed trade liberalization and economic growth at the forefront.

Scope

The TPP aimed to be highly comprehensive in scope, with widespread elimination of tariffs and provisions on e-commerce, labor rights, environmental protections, and intellectual property rights. It strove to set high standards across the Pacific Rim nations.

On the other hand, the RCEP has wider geographic coverage, encompassing 15 Asia-Pacific nations and nearly half the world’s population. However, it resembles a more traditional free trade agreement focused on facilitating trade in goods, services, and investment. While it has chapters on e-commerce, intellectual property protections, and support for SMEs, its depth and standards fall short of the TPP’s in areas like labor, environment, and intellectual property.

Protections

The TPP and RCEP diverge substantially regarding protections for labor, the environment, and intellectual property. The TPP established high standards in these areas, while the RCEP offers significantly less coverage.

Specifically, the TPP contained comprehensive obligations and enforcement mechanisms concerning the environment and labor standards. It mandated commitments to implement fundamental International Labour Organization conventions upholding freedom of association, collective bargaining, elimination of forced labor, and bans on child labor. Further, the TPP prohibited the reduction of environmental laws to attract trade and investment. It also included obligations to combat wildlife trafficking, illegal fishing, and logging.

In contrast, the RCEP lacks comparable protections for labor and the environment. It excludes dedicated chapters on either labor or the environment, instead utilizing separate joint declaration documents. Critics argue the RCEP’s protections lack legal force compared to the TPP.

Similarly, intellectual property protections in the TPP exceeded those of the RCEP. The TPP mandated robust patent protection for innovative drugs and biologics. It required criminal penalties for commercial-scale copyright piracy and trademark counterfeiting. TPP members also agreed to high copyright protections reflecting standards in U.S. law.

Comparatively, the RCEP contains less stringent intellectual property protections than the TPP, despite mandating concrete IP protection and enforcement obligations. The RCEP permits developing country members to delay IP protections while allowing flexibility for public health safeguards.

In summary, the TPP established far-reaching, legally binding protections for labor, the environment, and intellectual property absent from the RCEP. The TPP’s comprehensive safeguards provoked controversy for restricting regulatory sovereignty. In contrast, the RCEP’s limited protections granted developing members more flexibility. The differing approaches of the pacts on this issue underline their divergent priorities.

Business Provisions

The RCEP places greater emphasis on improving the overall business environment across member nations compared to the TPP. Some of the key differences in business provisions between the two agreements include:

• E-Commerce - The RCEP contains an entire chapter dedicated to e-commerce, establishing rules to facilitate cross-border digital trade. It aims to prevent barriers that would restrict electronic transmissions and provides frameworks for issues like online consumer protection, personal information protection, and digital signatures. In contrast, the TPP only included partial e-commerce provisions.

• SME Support - Acknowledging the critical role of SMEs in economic growth, the RCEP implements special measures to increase their ability to participate in and benefit from the agreement. This includes provisions on information sharing, reducing regulatory burdens, and enhancing access to finance. The TPP did not provide explicit support mechanisms for SMEs.

• Government Procurement - The RCEP mandates increased transparency in the government procurement process and non-discrimination against companies from partner countries bidding on government contracts. It aims to open up this sector among member states. Government procurement commitments were also present in the TPP but not emphasized to the same degree.

Overall, the emphasis on e-commerce, SMEs, and government procurement in the RCEP demonstrates its focus on improving the broader business climate across the Asia Pacific region. The TPP took a narrower approach more limited to trade liberalization.

Enforcement Against IP Infringement

The RCEP features a significant chapter focused on protecting intellectual property rights and enforcing them against counterfeiting and piracy. This addresses a major concern for innovative industries regarding the manufacturing and distribution of knock-off products.

The agreement requires criminal procedures and penalties for willful trademark and copyright infringement. It also mandates civil remedies and criminal procedures for the unauthorized decoding of encrypted satellite signals. Additionally, RCEP members agreed to promote cooperation and information sharing between IP offices and law enforcement agencies to detect and deter IP violations.

By including robust IP protections and enforcement measures, the RCEP aims to create an environment that supports continued innovation and creativity in member countries. This provides incentives and protections for companies to keep investing in research and development of new products and services across the region.

Conclusion

In summary, the TPP and RCEP represent two major regional trade agreements with both similarities and differences.

The key differences lie in their membership, with the TPP originally led by the U.S. and excluding China, compared to the RCEP which includes China. The TPP pursued more comprehensive elimination of tariffs and trade barriers, along with stronger protections for labor, the environment, and intellectual property. It also featured advanced provisions for e-commerce.

On the other hand, the RCEP resembles a more traditional free trade agreement focused on facilitating trade in goods, services, and investments. It provides a foundation of intellectual property protections and enforcement, as well as measures to support e-commerce, SMEs, government procurement, and competition regulation to improve the business environment.

The impacts of these agreements remain to be seen. The TPP awaits ratification after U.S. withdrawal, while the RCEP represents a milestone regional trade pact covering nearly half the world’s population. Both likely will shape global trade relations and spur economic growth among members, despite their differences in scope and depth. The TPP potentially could have more transformative impacts if ratified, while the RCEP makes incremental steps as one of the largest free trade agreements ever implemented.