Trade War, RCEP and CPTPP: Will East Asia Decouple from the United States?

41 Pages Posted: 19 Jun 2020 Last revised: 30 Nov 2020

See all articles by Peter A. Petri

Peter A. Petri

Brandeis University - Brandeis International Business School; Brookings Institution; Brandeis University - Department of Economics

Michael G. Plummer

Johns Hopkins University

Date Written: November 28, 2020

Abstract

The deepening US-China trade war and two new megaregional trade agreements, the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), are reshaping the landscape of East Asian trade. The CPTPP and RCEP are moving forward without the United States and India, respectively, which were once seen as critical partners. Using a computable general equilibrium model, we show that in the context of the US-China trade war these agreements will raise global national incomes by $121 billion and $209 billion annually by 2030, respectively, yielding especially large benefits for China, Japan, and South Korea and losses for the United States and India. These gains offset losses of $301 billion from the trade war globally, but not fully for the United States and China. The trade war increases the value of RCEP because it strengthens East Asian interdependence and will likely create regional ties similar to institutional arrangements proposed in the 1990s.

Keywords: RCEP, CPTPP, East Asia, Regional Economic Integration, CGE Modeling

JEL Classification: F13, F14, F15, F5, F6

Suggested Citation

Petri, Peter A. and Plummer, Michael G., Trade War, RCEP and CPTPP: Will East Asia Decouple from the United States? (November 28, 2020). Available at SSRN: https://ssrn.com/abstract=3630294 or http://dx.doi.org/10.2139/ssrn.3630294

Peter A. Petri (Contact Author)

Brandeis University - Brandeis International Business School ( email )

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Waltham, MA 02454-9110
United States

HOME PAGE: http://ppetri.com/

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

Brandeis University - Department of Economics

Waltham, MA 02454-9110
United States

HOME PAGE: http://ppetri.com/

Michael G. Plummer

Johns Hopkins University ( email )

Via Belmeloro 11
40126 Bologna
Italy

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