SINGAPORE — Given its absence in the world’s largest trade agreement, the U.S. might want to “keep some of the doors open” with the participating Asia-Pacific countries by negotiating bilateral deals with them, an economist from HSBC said Tuesday.
China and 14 Asia-Pacific countries signed the Regional Comprehensive Economic Partnership, or RCEP, on Sunday. Some analysts said the deal is a geopolitical win for China in the region, especially after President Donald Trump in 2017 pulled the U.S. out of a competing mega trade pact called the Trans-Pacific Partnership, or TPP.
“What the U.S. might do … is strike more bilateral deals, bilateral agreements with individual RCEP members — not all of them but with some of them, just to keep some of the doors open,” Frederic Neumann, HSBC’s managing director and co-head of Asian economics research, told CNBC’s “Squawk Box Asia.”
Participating countries in RCEP include the 10-member Association of Southeast Asian Nations and their top trading partners China, Japan, South Korea, Australia and New Zealand. Among them, the U.S. only has bilateral trade deals with South Korea, Australia and Singapore, according to the Department of State.
The TPP, negotiated by the Obama administration, would have allowed the U.S. greater engagement with the Asia-Pacific region.
President-elect Joe Biden, when asked on Monday whether the U.S. should join RCEP, said his country needs to be aligned with other democracies so that “we can set the rules of the road instead of having China and others dictate outcomes because they are the only game in town,” reported Nikkei Asia.
According to the report, he stopped short of committing to join RCEP or the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) — an updated version of the TPP that the remaining 11 countries renegotiated after the U.S. left unilaterally. But he reportedly said he has a “pretty thorough plan” to announce in January, reported Nikkei.
Like many experts, Neumann said there’s “overwhelming strategic arguments” why the U.S. should join the CPTPP, but domestic politics would make it difficult to do so.
“And the U.S. has its plate full right now, domestically,” he said, adding that the question of whether the U.S. would join CPTPP is one to be revisited in “maybe two years’ time.”
The U.S. alone accounts for about 20% of the world’s total number of coronavirus cases, according to data compiled by Johns Hopkins University. The country has seen more than 247,000 deaths from Covid-19 so far and is currently battling a resurgence in cases.
Biden has said that containing the coronavirus is one of his immediate priorities once he takes over the presidency.