Mega-Regional Trade Agreements

1464
DOI: 10.20542/0131-2227-2016-60-9-17-27

V. Salamatov, Russian Presidential Academy of National Economy and Public Administration (RANEPA), Graduate School of Corporate Management, 82/1, Prosp. Vernadskogo, Moscow, 119571, Russian Federation; OOO “International Trade and Integration”, 7/1, Podkopaevskii Per., Moscow, 109028, Russian Federation (VYSalamatov@itandi.ru

Abstract. The creation of mega-regional trade agreements (MRTAs) is the next step in the evolution of regionalism and, at the same time, a major challenge for the world economy, existing globalization pattern and balance of powers. MRTAs are deep institutional agreements (with some exceptions) that generate far-reaching effects globally due to huge potential of participating economies. This provides synergy of leading markets, effective interdependence and stimuli for value chains’ development. Analysis is focused on recently signed Trans-Pacific Partnership (TTP), Transatlantic Trade and Investment Partnership (TTIP) and Regional Comprehensive Economic Partnership (RCEP). Progress of MRTAs follows competitive logic, from both economic and geopolitical points of view, as US-led partnerships – TTP and TTIP – took the leadership in the race for future market dividends and decisive role in drawing new trade rules. Countries non parties to MRTAs may suffer from trade and investment diversion effects and are strongly pushed to elaborate their own set of counter-strategies to deal with MRTAs, i.a. amend domestic legislation towards MRTAs requirements, create their own blocks or join mega-regionals. Having almost 80% share in world trade MRTAs posses enough power to promote own rules and standards on wider scale and make third countries think in terms of greater compatibility with the latter. Development of MRTAs leads to fragmentation of the formerly universal process of globalization, to creation of strongly self-sufficient and protected economic areas leaving large parts of value chains for themselves. Moreover, with emergence of MRTAs globalization began developing at varying velocity in different parts depending on the specific interests and ambitions of the leaders of mega-regionals. From structural and technological perspective US-led MRTAs fully match American economic strategy to host new generation technologies and to build economy of scale for their commercial use. TTP and TTIP agenda secures intensive use of new technologies and highly reliable protection of US technological and commercial secrets. From ideological and geopolitical perspective, through MRTAs the USA promote liberal economic practices, strengthen ties with their allies and expose defensive resistance to the rise of China and BRICS. Significant outcome of MRTAs’ functioning – enhanced bipolar logic regarding competition pattern in global economy and world trading system. The two major players are USA and China, both continuing to shape their own spheres of influence. Besides RCEP, China is making strong effort to promote its strategic initiative – Economic Belt of Silk Road (already heavily funded). Also, Beijing is pressing participants of Shanghai Cooperation Organization (SCO) to start negotiations on comprehensive free trade agreement with a perspective of creating new economic partnership in Eurasian region. Potential membership of this new partnership includes China, Russia and other countries of Eurasian Economic Union (EAEU), India and Pakistan which are already joining SCO, and, under certain conditions, Iran and Mongolia. Combined economic and resource potential of two actual MRTAs with US participation and one actual (RCEP) plus one potential (new economic partnership) MRTAs with Chinese participation is close, however US-led MRTAs have supremacy in trade, while China-driven partnerships have noticeably bigger territory and demographic base. Recommendations for Russia and EAEU as a whole include EAEU participation in own MRTA formation based on enlarged SCO; building integration “bridges” with RCEP with focus on ASEAN; developing bilateral free trade agenda vis-à-vis countries with significant potential for EAEU’s non-traditional and innovative exports.

Keywords: TTIP, TTP, RCEP, WTO, mega-regional trade agreements, MRTAs, mega-partnerships, globalization, world trading, USA, EU, China, Russia, EAEU, SCO 


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For citation:
Salamatov V. Mega-Regional Trade Agreements. World Eonomy and International Relations, 2016, vol. 60, No 9, pp. 17-27. https://doi.org/10.20542/0131-2227-2016-60-9-17-27



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