The world’s largest free trade area may be rounding into shape. Last week, Singapore’s trade minister said a broad agreement on the Regional Comprehensive Economic Partnership, which would include all of East and South Asia’s largest economies, would be reached by the end of this year. India, perhaps the biggest obstacle to an agreement, struck a more cautious tone, saying talks would need to extend well into 2019. Nonetheless, New Delhi confirmed that a “major breakthrough” had been achieved in talks last week, fueling new hopes about the pact.

On paper, at least, RCEP is startling in its breadth and aspiration. The 16 nations at the negotiating table account for nearly half of the global population and some 30 percent of global gross domestic product. And it is indeed striking that, in a time of surging protectionism in the West, countries in the world’s most dynamic region – one with a vast and growing consumer base that all parties are eager to tap into – are pushing forward with integration on such a scale. But the sprawling mix of countries involved in RCEP is too beset with conflicting interests to forge common agreement on all but a narrow set of issues, meaning a new era of free trade in the region is not in the offing. And whatever gets hammered out in the coming months, claims that RCEP is proof that the U.S. has ceded its influence in the Indo-Pacific to China will continue to ring hollow.

Bad Narratives

The scale of the initiative, combined with the U.S. absence, has led to the proliferation of some inaccurate narratives about the pact. Most prominent, RCEP is often portrayed as a push by China to fill the vacuum ostensibly vacated by the U.S. when it turned to protectionism following President Donald Trump’s election. Absent the Americans, the story goes, much of the Indo-Pacific has been left with little choice but to allow China to rewrite the rules of regional trade to its tastes. This isn’t true, for several reasons.

For one, RCEP is hardly a China-led initiative. The proposed pact is really centered on the Association of Southeast Asian Nations, with the original goal being to harmonize a tangle of existing free trade agreements among Southeast Asian states and with a range of outside powers, including China but also India, South Korea, Japan and Australia. Such countries have no less influence over the pact than Beijing. Nor is China powerful enough to dictate terms to most regional states, many of which are economic heavyweights in their own right and deeply wary of China’s rise. Though China’s economic heft is vast, it is only one of many centers of gravity in the region.

Moreover, China cannot emulate the United States’ traditional approach to championing free trade. The U.S. can dangle the carrot of access to the world’s largest consumer market to exact a range of painful concessions from trade partners, and it can trade with lower-wage countries without tanking its or their economies. (Even if the loss of labor-intensive manufacturing to globalization and automation have contributed to wage stagnation in the U.S. middle class, on the whole, U.S. manufacturing and exports are at historic levels.) China is still too poor, too politically fragile and too dependent on low-end manufacturing – sectors where it’s competing directly with some of its even lower-cost neighbors – to play a comparable role.

China certainly is gaining a reputation in the region for coercive economic statecraft, with some merit. But to the extent that Beijing has been bullying weaker states into lopsided agreements, it’s been solely in bilateral settings – not multilateral settings involving states powerful enough to resist. Whatever final agreement emerges, it’s unlikely to be tilted heavily in China’s favor.

Another common narrative paints RCEP as evidence that much of the world is moving on without the U.S. on the trade front in ways that run counter to U.S. interests. But the U.S. was never interested in joining RCEP, even before Trump stormed to office and overturned U.S. trade strategy toward the region. Among other reasons, this is because most ASEAN states could not meet the high environmental, regulatory, transparency, IP, investment and labor standards the U.S. would demand for a free trade deal. Instead, the U.S. focused on building out a regional trade architecture involving states most ready or willing to meet its standards through the Trans-Pacific Partnership, which Trump abandoned but which has since been revived as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership by the 11 remaining members and is set to kick in next year. Whatever the flaws in TPP that created the political impetus for the U.S. to pull out, Washington’s economic goals in spearheading the pact were to pry open markets and secure protections for the sort of high-value industries that will form the backbone of the U.S. economy for the next century. RCEP couldn’t achieve these goals, given that the participation of countries in the earliest stages of development (like Cambodia, Laos and Myanmar) and those unwilling to take on sweeping market reforms (like China and India), rendered such a “gold standard” agreement impossible.

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But neither was the U.S. really opposed to RCEP in principle, so long as it could count on its like-minded regional partners to prevent China from using the pact to tie weaker states to its model of state capitalism. Indeed, TPP and RCEP were not rival pacts, as was often portrayed; there’s ample reason for many countries to be in both. The broader strategic rationale of TPP for the U.S., meanwhile, was to contain Chinese economic coercion by giving its neighbors alternative markets and, ideally, entice China to reform out of fear of getting left behind. RCEP won’t work against these aims. Anything that makes regional states more dependent on each other (and thus less dependent on China), and that gives Japan, India, Australia and ASEAN more influence, works in the long-term U.S. interest. The U.S. will benefit from the revived TPP in similar ways.

Racing to the Bottom

It is true that fears of getting caught in the crossfire of the U.S.-China trade war – combined with the White House’s threats to go after just about any country, friend or foe, that has a yawning trade deficit with the U.S. – has added regionwide urgency to get the deal done. There’s nothing like a looming crisis to spur a bunch of bureaucrats into action. But there isn’t much evidence that this is compelling states to make concessions they wouldn’t otherwise. In reality, it’s still doubtful that regional states will be able to put aside the tangle of competing interests enough to forge anything but a deal so riddled with implementation delays, weak enforcement mechanisms and exceptions carved out for the protectionist demands of particular members that it scarcely lives up to its billing as “the world’s largest free trade area.” The devil is always in the details, and in multilateral trade pacts, the details tend to settle around the lowest-common denominator.

Consider the potential members: India wants more labor movement and stiff protections for domestic industries. Singapore wants the opposite. Thailand and Malaysia want to move forward without Australia and New Zealand, which they think want too much economic liberalization, as well as India, which wants too little. Japan wants to keep India to balance China’s heft and further the goals of the “free and open Indo-Pacific.” Indeed, everyone is wary of being flooded with Chinese imports. Vietnam, which has enough on its plate implementing CPTPP, reportedly is losing interest altogether. Thailand is mulling focusing its efforts on joining CPTPP as well. Laos, an opaque, landlocked state with a population smaller than two dozen Chinese cities, is somehow expected to fit neatly with this grouping. Most of the states involved have made non-tariff barriers an art form.

Finding enough common ground to strike any agreement would be no small feat. And it’s certainly worth a try, considering the growth potential of the region’s consumer base. It’s just unlikely to be much of an economic game-changer, nor a zero-sum loss for the United States.

Phillip Orchard
Phillip Orchard is an analyst at Geopolitical Futures. Prior to joining the company, Mr. Orchard spent nearly six years at Stratfor, working as an editor and writing about East Asian geopolitics. He’s spent more than six years abroad, primarily in Southeast Asia and Latin America, where he’s had formative, immersive experiences with the problems arising from mass political upheaval, civil conflict and human migration. Mr. Orchard holds a master’s degree in Security, Law and Diplomacy from the Lyndon B. Johnson School of Public Affairs, where he focused on energy and national security, Chinese foreign policy, intelligence analysis, and institutional pathologies. He also earned a bachelor’s degree in journalism from the University of Texas. He speaks Spanish and some Thai and Lao.