TPP versus RCEP: Control of Membership and Agenda Setting

Abstract

I. IntroductionTraditional theorists explain regional integration efforts as a balancing phenomenon. For them, United States (US) leadership in the Trans-Pacific Partnership (TPP) negotiations is related to its attempt to balance against a rising China. Likewise, they would argue that China's policy to establish the Regional Comprehensive Economic Partnership (RCEP) can be best understood as a counter-proposal for a regional economic coalition vis-a-vis the US-led TPP. However, direct application of security-centric theory, which implicitly assumes wars as the ultimate tool of external policy, to the economic field is problematic, given the low probability of wars.This paper argues that the formation of regional integration and cooperation frameworks can be best understood as a dominant state's attempt to create its own regional framework where it can exercise some exclusive influence. In this context, it is important to observe not only which countries are included in a regional framework, but also which countries are excluded from it. The distinct feature of TPP is that China is excluded, and that of RCEP is that the US is excluded (Aziz 2013; Petri 2013). While economists tend to emphasize membership, namely who is in the group, what is politically more important in understanding group formation is exclusion. This is because the exclusion of rival states is necessary for countries seeking to assume leadership. This paper puts special emphasis on exclusion, rather than inclusion, in analyzing trade regionalism, which is an approach adopted by some political science literature.1This paper is structured as follows. First, the paper explains the analytical framework: the control of membership and agenda of regional economic integration groupings. It then reviews the development of TPP and RCEP from the standpoint of membership (especially exclusion) and agenda setting. The rivalry between the US and China that manifests itself in the competing TPP and RCEP proposals is at the heart of the discussion. In addition, the rivalry between China and Japan in East Asia will also be discussed. The final section concludes.II. Pitfall of Balance-of-Power TheorySome may consider that the logic behind the formation of regional security groupings is similar to that in the formation of regional economic groupings. The so-called balance-of-power usually takes the form of competition between one alliance and another or one nation, rather than the equilibrium of two isolated nations. Alliance vs. (Morgenthau 1973) is the most spectacular configuration of balance-of-power. For such theorists, the creation of regional cooperation frameworks can be explained by the logic of alliance formation. For example, the formation of the Soviet Union-led Council for Mutual Economic Assistance (COMECON) should be interpreted as a counter-alliance against the US-led North Atlantic Treaty Organization (NATO). The formation of the Gulf Cooperation Council (GCC) can be interpreted as a coalition against Iran (Hurrell 1995). In this context, US leadership in the TPP negotiations is related to its attempt to balance against a rising China. Likewise, balance-of-power theorists would argue that China's policy to establish RCEP can be best understood as a counter-proposal to the US-led TPP.However, the traditional balance-of-power framework entails several inherent weaknesses in explaining economic cooperation frameworks. First, an importation of security-centric theory, which implicitly assumes wars as the ultimate tool of external policy, into the economic field is problematic, given the low probability of wars. Unlike in a security alliance where the coalition automatically gives security to member countries, it is not easy to foresee the impact of economic cooperation among partner economies. Moreover, overlapped membership in economic groupings implies that economic cooperation and security alliances are two different things. …