The US believes that the clinching of bilateral trade deals with the other three members of the so-called “Quad” — Australia, India, and Japan — could kill China’s plans for the Regional Comprehensive Economic Partnership, thus forcing its capitulation in the “trade war” by depriving it of the backup plan on which it’s been relying to drag out its talks on reaching a deal.
The US is planning a coup de grâce that it expects will force China’s capitulation in the “trade war” by later this year as long as it succeeds in conspiring with the so-called Quad of itself, Australia, India, and Japan to kill Beijing’s plans for the Regional Comprehensive Economic Partnership (RCEP) through the clinching of bilateral trade deals that could make this multilateral one impossible to pull off. China has thus far failed to reach an agreement with the US on ending their economic warfare against one another because it’s relying on RCEP as its backup plan to drag out the talks with the expectation of either getting better terms from its rival or gradually replacing it with its new array of partners in lieu of that. Taking away RCEP could instantly change the game by compelling China to agree to the US’ trade demands unless it decides to take one last gamble by exploring the potential for CPEC+ free trade agreements before waving the white flag.
Negotiations on this trans-regional TPP-like deal were rapidly advancing and expected to conclude by later this year before India suddenly signaled that it won’t agree to it unless certain provisions are in place for protecting many of its domestic industries that Modi campaigned on strengthening through his “Make in India” program. This took the Chinese off guard, who had hitherto assumed that India was fully on board with this economic integrational plan after falling for their “frenemy’s” feint in pretending to have intractable issues with the US all over the summer following the latter’s revocation of the former’s participation in the Generalized System of Preferences (GSP) regime. That myth was shattered earlier this month and then put to rest once and for all following the extremely successful outcome of his “Howdy, Modi” event with Trump, after which reports swirled about the very likely possibility of a limited trade deal being agreed to between the two sometime in the coming future.
Coupled with the US’ existing free trade deal with Australia and the one that it also plans to reach with Japan sometime soon too, the inclusion of India into this larger network of bilateral pacts would amount to the entire Quad shifting towards the US and away from China by default due to the immense difficulty in harmonizing separate trade deals with both rivals. Furthermore, the “with us or against us” pressure that Trump would certainly bring down to bear on any of his partners if they dare to defy agreed-upon trade terms by enabling China to use their countries as a “back door” to the American marketplace through RCEP (in its current form) could be enough to get them to reconsider their commitment to that Chinese-led trans-regional TPP-like deal. It should also be mentioned that despite China being the Quad’s top trading partner (though the US recently replaced China in India due to its energy exports following New Delhi’s compliance with Washington’s unilateral anti-Iranian sanctions regime), they all have an interest in changing this state of affairs for strategic reasons.
India and Japan are the co-founders of the “Asia-Africa Growth Corridor” that they envisage competing with China’s Belt & Road Initiative (BRI) not in the impossible dollar-to-dollar sense but by exploiting the shortcomings of Beijing’s global initiative with the support of their US, Australian, Emirati, French, and other like-minded partners which have a shared stake in “containing” the People’s Republic. Relatedly, the AAGC countries — and especially India — could be presented as suitable re-offshoring locations for Western firms leaving China because of the “trade war”, thus adding further economic pressure on Beijing to cut a deal with Washington as soon as possible in that scenario. The US’ coup de grâce against China therefore depends on its success in reaching even limited free trade deals with India and Japan which could then be weaponized to throw a spanner into RCEP and get the ASEAN nations to reconsider the wisdom of joining it. Left without its most reliable recourse for surviving the “trade war”, China might either surrender or decisively pivot westward.
What’s meant by the latter isn’t the West in the geopolitical sense but in the purely geo-economic one related to the CPEC+ trade corridors that could branch off from BRI’s flagship project in the global pivot state of Pakistan to connect with Central Asia & Russia in the north; the GCC, Iran, and Turkey in the west; and the Horn of Africa & East Africa in the south as a long-term replacement to “losing” India, Japan, and/or ASEAN’s valuable marketplaces if they pull out of RCEP. The developing CPEC+ partners’ economies aren’t comparable to the RCEP’s ones in real-sector (non-energy) aggregate terms but are much more geo-economically reliable because they mostly don’t have to rely on maritime commerce that could easily be disrupted by the powerful US Navy in the event of a crisis like its trade ties with those in East and Southeast Asia. Should China shift its economic focus westward in response to the possible collapse of RCEP or it being radically reformed in order to accommodate India’s US-influenced economic interests and/or harmonize the bloc’s trading procedures so that its members can still remain in or reach similar deals with the US, then the outcome would symbolically represent a sharpening of the comprehensive competition between the Eurasian Heartland and its Rimland.
All of the above, it should be noted, is scenario forecasting based on a reading of this complex situation that’s come to strongly influence the contours of the “trade war” and is based upon the verifiable facts of India’s reluctance to go forward with RCEP in its present form and Trump’s desires to clinch trade deals with both it and Japan as soon as possible. The US’ failure to do so would probably result in RCEP becoming a fait accompli, even without India’s participation if it decides to pull out of the framework, though any progress made by the President in pursuit of his plans could endanger this trans-regional TPP-like trade deal and thus set into motion a chain reaction of events that could either result in China’s capitulation or its gamble on reaching free trade deals with the CPEC+ countries in response. Judging by the rapidly moving and interconnected dynamics at play, global economic processes are evidently accelerating and quickly coming to a tipping point that will inevitably move China’s focus in one direction (RCEP) or the other (CPEC+), both of which are intended in order to stave off a surrender in the “trade war” amidst the US’ unprecedented pressure to do so.
By Andrew Korybko
Source: One World