As mentioned in our previous issue, the recently-signed Regional Comprehensive Economic Partnership (RCEP) between 15 Asia-Pacific nations represents almost one third of the world's population and GDP.

It's noteworthy that the US is not a party to this agreement nor the Pacific Rim alternative, the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).

Negotiations for the latter when it was more simply called the Trans-Pacific Partnership, were lead by the US so as to make it a more robust agreement with protections for labor, environment and intellectual property. The US, however, pulled out before signing it.

Although seven of the 11 countries that are signatories of the CPTPP also belong to the RCEP, these 11 member countries generally have stronger and more outward-looking economies.

RCEP is admittedly more vague and has higher tariff levels relative to

the CPTPP, but the signing of RCEP was only the start. It calls for a standing secretariat that will meet regularly to improve upon the agreement.

Also, the 40% rules of origin will foster the development of regional manufacturing supply chains. This will benefit US companies with factories in RCEP member countries, but it will work to exclude US-based manufacturing operations. Moreover, lax content rules will simplify the exchange of components and create a highly competitive regional manufacturing network.

ASEAN countries are already the fourth largest US export destination and moving quickly toward becoming the third. The population is young, they have weathered COVID-19 well, and growth will continue at a brisk pace. This is in part because the motivation to trade is alive and well in Asia relative to here in the US, where there are significant anti-globalism sentiments.

Reconsideration of joining a trans-pacific trade pact has become more important. It could serve as the economic link to help us benefit from trade with this dynamic region.