IPRI – Islamabad Policy Research Institute

Economic integration — a foreign policy tool

East Asia is an economically integrated region. Association of Southeast Asian Nations (ASEAN), Asia Pacific Economic Cooperation (APEC), and Regional Comprehensive Economic Partnership (RCEP), which is expected to come into force in January 2022, are reflective of region’s economic integration. The regional countries’ collective drive towards economic growth has contributed towards region’s cohesion. The economic integration has acted as a balancer against the political competitive tendencies at regional front. The regional countries’ tilt towards economic integration underscores the importance of economic security. It also shows that strong economy is the bedrock upon which the political castle is build. The economic agreements are platforms wherein states formulate rules best suited to their well-being and the region at large. With economic growth, states political clout also enhances.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a new initiative. CPTPP member states are Japan, Singapore, Malaysia, Brunei Darussalam, Vietnam, Australia, New Zealand, Canada, Chile, Mexico and Peru. These countries were initially part of late Transpacific Partnership (TPP) agreement. TPP was the economic arm of US pivot to Asia. Former US President Barack Obama said “the US, not China, should write the regional rules of trade.” However, in 2017, the Trump administration withdrew from TPP. The development of CPTPP shows that the regional countries despite the US withdrawal from TPP have continued with the idea of economic integration. CPTPP can be termed a meaningful model of trade integration having membership from the region and beyond. CPTPP’s trans-regional character is an attraction for other economic bodies. The engagement with CPTPP is a licence to drive through the Indo-Pacific. For instance, the likely inclusion of EU into CPTPP will provide the former with a trading platform to step into the Indo-Pacific alongside economic gains. EU has trading ties with Japan (Japan-EU FTA) and Australia; both the regional countries would support a like-minded player in CPTPP.

The concept of economic integration and trade liberalisation has led to regionalism and economic growth. However, the critics of plurilateral preferential trade view the economic groupings as a political response by the West to the ‘rise of the rest’, in particular China. Edward Luttwak, an early conceptualiser of the idea of geo-economics, opines, “Countries whose economies are under threat from China’s policies — policies that seek to make China’s industries globally more competitive — should come together to contain China geo-economically.” China has applied to join the economic grouping despite CPTPP political lineage with the US-led TPP. Premier Li Keqiang has said that China wants to “strengthen cooperation in trade through free trade agreements”. Cao Xin, Secretary General of Charhar Institute (an International think tank in Beijing), in one of his articles, writes, “China knows that developing economic and trade relations with other countries in the world is the most effective way to hit back at the contain-China policy being carried out by the US and its allies.” The CPTPP members, the regional countries, have trade relations with China and are also members of RCEP.

In today’s world, the strategic approach to enhance bilateral engagements, to be a trans-regional player and to widen the geopolitical horizon, is not entirely dependent on military capability. Rather to emerge strong at the political front and to counter the adversarial clout, an economic diplomacy backed by economic prowess is a must. The economic organisations and economic corridors have become pivotal to a state’s foreign policy. The economic muscle also gauges the region’s political outlook. The submarines might send deterring signals to adversary but to counter the challenger and to impede expansionism, economic encounter is a much more potent force. The American Chamber of Congresses from Singapore, Malaysia, Vietnam and New Zealand have urged the Biden administration to join the CPTPP.

Note: This article appeared in The Express Tribune, dated 25 November 2021.
Disclaimer: The views expressed in the article are of the author and do not necessarily represent Institute’s policy.


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