Joel K. Richards
In geopolitics today, as it occurs in nature, the sun rises in the East. Here, I am specifically referring to the East-Asia region which is now one of the most dynamic regions of the world in terms of economic growth, technology and innovation. Recently, on 15th November 2020, this region sent a signal of its growing strength to the rest of the world by concluding eight years of tough negotiations for a Regional Comprehensive Economic Partnership (RCEP) Agreement.
RCEP is now the world’s biggest trade deal and it involves 15 economies, including members of the Association of South-East Asian Nations (ASEAN), Australia, China, Japan, New Zealand and South Korea. By comparison, RCEP is bigger than both the European Union (EU) and the United States (US)-Mexico-Canada Trade Agreement.
Currently, based on a report by the British Broadcasting Corporation (BBC), members of RCEP comprise almost one-third of the world’s population and make up for roughly 29% of global gross domestic product (GDP). The British multinational investment bank HSBC predicts that by 2030, RCEP could account for 50 percent of global output. Furthermore, the Peterson Institute for International Economics estimates that RCEP has the potential to increase global national income by USD$186bn annually by 2030 and add 0.2% to the economy of its member states.
Because China is part of RCEP, some observers see the agreement as a major geopolitical victory for Beijing, especially when considering that the US pulled out of the Trans-Pacific Partnership (TPP) when President Trump assumed office. We should recall that the TPP formed part of the Obama Administration’s pivot to Asia, a move interpreted as countering China’s influence in that region.
RCEP may indeed turn out to serve China’s interests. However, it would be wrong to assume that the deal is primarily about China. Peter Petri of the Peterson Institute and Michael Plummer of Johns Hopkins University estimate that Japan and South Korea will gain the most because by 2030, their real incomes are expected to be 1% higher than they would have otherwise been.
RCEP is further evidence of Asia’s growing power, especially at a time when the corresponding power and influence of the EU and the US appear to be on the decline. In a research note, economists at HSBC have stated that RCEP “may reinforce a trend that’s been already underway for decades: that the global center of economic gravity keeps pushing relentlessly to the East.”
This idea that the global center of economic gravity keeps shifting to the East is particularly important for small developing states in the Caribbean which continue to rely heavily on North America and the EU for trade and investment. Of course, there are historical ties with Europe as well as proximity when it comes to North America which suggest that total decoupling is unlikely to ever take place. In any case, total decoupling should not be the goal. Nonetheless, Asia’s economic dynamism and its excellence in areas such as innovation and technology mark it out as an ideal region with which to develop strong economic and diplomatic ties.
It is also important to emphasize that Asia is more than just China. Singapore for example has emerged over the years as one of the world’s most advanced economies, notwithstanding its relatively small size. Singapore has world class logistics, financial services, business facilitation services and transport engineering services among other competitive advantages. South Korea is another of Asia’s success stories and it has experienced one of the largest economic transformations in modern times, with specific strengths in technology development and innovation. For its part, Japan has the world’s third largest economy, a high capacity for innovation and technology, and thousands of cash-rich businesses. These are all strengths that can be tapped into by Caribbean countries through diplomacy and economic cooperation arrangements to the extent that the political will exists to bring about the desired outcomes.
Finally, the notion that the sun is rising in the East should not suggest that it has set in the West, at least in a geopolitical sense. The West, mainly the US, Canada and the EU will continue to occupy an important role both globally and in the Caribbean region. However, as Asia continues on an upward trajectory, this calls for more engagement between the Caribbean and Asia with a view to enhance trade, investment, technology and innovation, especially for the benefit of Caribbean economies and societies.
Joel K. Richards is a national of St. Vincent and the Grenadines. He previously worked as an Advisor to the CARICOM Secretariat and the principal trade consultant to the Barbados Private Sector Association. He is currently based in Europe where he works in the field of international trade and development.