With the signing of the Regional Comprehensive Economic Partnership (RCEP), the world’s largest trade pact, another trade policy initiative from Asia has come into focus. While RCEP is expected to enter into force in 2021, the second major Asia-Pacific trade initiative, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has already been a reality for two years. ZHAW lecturer Dominique Ursprung has joined free-trade expert Patrick Ziltener in an analysis of the resulting trade policy challenges for Switzerland.
An interesting characteristic of both mega-regionals is that, for the most part, the participating countries were already linked to each other by free trade agreements, so they by no means represent a free trade “Big Bang” in Asia-Pacific. As Patrick Ziltener was able to show in his study on RCEP for Switzerland Global Enterprise (S-GE), the most important fact about the RCEP is that it enables, for the first time, free trade between China and Japan and between Japan and South Korea.
From the perspective of the ASEAN countries, the added value of RCEP is that it creates a “single rulebook” for the 15-nation region. It is hoped that this will lead to further improvements for value chains across and beyond the ASEAN region.
Ursprung and Ziltener have analyzed the implications of these developments for Switzerland in an article published on the internet platform “Ökonomenstimme”. It highlights the current challenges in Swiss foreign trade policy and, in the case of CPTPP, addresses the possibility of additional members joining the partnership agreement. The authors conclude that due to its dynamic nature – the UK, the US, China, and other countries may well ask to join – this mega-regional is also of great importance for Switzerland.
The Swiss goverment, which has been struggling for many years to update its large network of free trade agreements, could benefit very efficiently from CPTPP due to its size. It is true that Switzerland already has bilateral trade agreements with China and Japan and, through the European Free Trade Association (EFTA), also with nine other partners in the Asia-Pacific region (see chart). However, these agreements are becoming increasingly outdated, and attempts to update the existing deals have failed so far. The fact that Swiss free trade agreements are since 2019 subject to an optional referendum will not make matters any easier. Nevertheless, it is recommended that Switzerland should consider joining CPTPP in order not to miss out on this opportunity and avoid discrimination for Swiss exporters in Asia Pacific and beyond.
The analysis was quoted by the Neuen Zürcher Zeitung on 21 December 2020: “Handelspolitik: Soll die Schweiz in Asien liegen?”