Competing Regionalisms in the Asia-Pacific? Versatile Sustainable Development Issues in FTAs

The essay explores the inclusion of sustainability commitments in free trade agreements (FTAs) in the Asia-Pacific and the potential differences in their emphases that may reflect “competing regionalisms” in the region. Discussing the geo-economics of cross-border regionalism, the diverse trade agreements are compared as to provisions on sustainable development, and reflected with European Union FTAs. Findings indicate a lack of sustainable development issues in the Regional Comprehensive Economic Partnership and in China’s FTAs with regional neighbors, whereas the Trans-Pacific Partnership, and its successor, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, have substantial commitments on environmental and labor protection. The results suggest that the role of advanced economies as norm setters in sustainability policies may be challenged by a shift toward other emphases in Asia-Pacific FTAs. This contributes to our understanding of the cross-currents in global trade regime leading to competing regionalisms, and therefore, the limits to multilateralizing sustainability issues.


INTRODUCTION
T his essay explores free trade agreements (FTAs) in the Asia-Pacific as an interaction between geo-economics and geopolitics in the region and considers trade partnerships, but also possible trade "wars" between global economic powers.The proliferation of trade agreements by Asian countries accelerated by the 2010s (Baldwin and Kawai 2013;Kawai and Wignaraja 2010;M€ olders and Volz 2011).However, trade negotiations have been ß 2023 The Author(s).Published with license by Taylor & Francis Group, LLC This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/),which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.The terms on which this article has been published allow the posting of the Accepted Manuscript in a repository by the author(s) or with their consent.challenged by the tense geopolitical situation and rising skepticism toward globalization (Cuervo-Cazurra, Doz, and Gaur 2020), as well as the recent global financial crisis (Evenett 2019) and COVID-19 pandemic (Baldwin and Evenett 2020;Evenett et al. 2022).These have led to decoupling and de-risking policies (i.e., a process of separation from an interdependent trade relation), thus reducing economic risks involved.Yet countries look for deals with strategic trade partners.For example, China has been active in concluding trade agreements and has FTAs in force with Singapore, South Korea,1 Australia, New Zealand, Cambodia, and the Association of Southeast Asian Nations (ASEAN).China also is a member and had a central role in concluding the Regional Comprehensive Economic Partnership (RCEP) among 15 Asia-Pacific countries.However, China is not part of the Trans-Pacific Partnership (TPP) or its successor, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) comprising 11 countries in the region.
The European Union (EU), on the other hand, has similarly been keen on negotiating trade deals with Asian countries (e.g., Lindberg and Alvstam 2012), and it has FTAs in force with Korea, Singapore, Vietnam, and Japan.In contrast, whereas the EU and China are important trade partners to each other and their economic interdependence is high, they have disagreements in trade policies and a number of trade disputes, and negotiations for an FTA are not in the vicinity.Central to the EU's trade policy is to promote a regulation-based international trade system, and its "new-generation" FTAs include provisions on sustainable development (i.e., protection of labor and the environment).Together with other advanced economies, the EU has been a proponent of new issues, such as an emphasis on transparency (Lej arraga 2013, 23).The EU is often addressed as a norm promoter in international trade policies (Garcia and Masselot 2015;Poletti and Sicurelli 2018;Sampson and Theuns 2023;Sicurelli 2015;Zurek 2019) aiming to advance its interests by using trade policy tools such as FTAs in geopolitical settings.
Yet China is different from many Asian trade partners, being powerful both politically and economically, which may challenge the prospect for multilateralizing regionalism (Baldwin 2006(Baldwin , 2014;;Baldwin & Thornton 2008); that is, agreeing on trade issues first at the regional level and later at the multilateral level.This may have important geopolitical implications due to the economic interdependence of the involved trade partners.Whereas the EU is promoting green transition within Europe and sustainability in its foreign trade strategy to support digital and climate transitions, the policies in Asia-Pacific countries are significantly more diverse.The cross-currents in global trade may either promote cooperation or speed up competition and even rivalry among the different actors.These have an effect on whether regionalism can be multilateralized, on what terms, and what kinds of forces are pulling regionalism attempts within Asia.Considering the contemporary global challenges of carbon neutrality and the concurrent geopolitical and geo-economic competition between the world's major powers, the issues are certainly pressing.
Therefore, this essay is motivated by three research questions: What kinds of emphases are there in the FTAs of China and the broader Asia-Pacific?How are sustainability issues included in the FTAs in the Asia-Pacific?Are there differences that could reflect "competing regionalisms" led by China on the one hand and the EU and advanced economies of the Asia-Pacific on the other?To answer these questions, China's FTAs within the Asia-Pacific are explored, compared, and reflected with advanced economy FTAs.This is done by (1) investigating the agreement text of RCEP and comparing it with TPP/CPTPP and EU FTAs with Asian countries, and (2) comparing China's bilateral FTAs with Singapore and Australia with an FTA between two other Asia-Pacific countries, Indonesia and Australia.Further information is gathered from interviews with three trade policy officials specialized in EU-Asia trade agreements.The focus is on the inclusion of sustainable development issues in these agreements that is expected to reflect the geo-economics of cross-border regionalism in the Asia-Pacific.The essay continues by discussing the literature on multilateralizing regionalism and the diversity among FTAs.This is followed by findings on sustainable development issues in FTAs in the Asia-Pacific and the possible competing regionalisms.

MULTILATERALIZING REGIONALISM: HARMONIZING FTAS
T he concept of multilateralizing regionalism entails that trade liberal- ization may first be agreed-on in geographically more limited bilateral or regional FTAs and then multilaterally at the World Trade Organization (WTO) (Baldwin 2006).This idea is a possible solution to the complexity of trade policy landscape consisting of an overwhelming multitude of bilateral and regional FTAs (Bhagwati 2008;Kawai and Wignaraja 2009).In FTAs, countries agree on the liberalizing of mutual trade by removing signified trade barriers, mostly import tariffs, but also many nontariff barriers, such as import quotas and prohibitions.Therefore, FTAs are at the core of regionalism, a form of state-led economic integration that gained momentum in Asia along the ASEAN2 FTA agreement (Fujita, Kuroiwa, and Kumagai 2011).It has been expected that Asia could be central in the multilateralizing process because of the fast-growing number of FTAs (Baldwin and Thornton 2008;M€ olders and Volz 2011).Countries may start step by step to harmonize bilateral FTAs to later come to an agreement within a larger country constellation.The geographical expansion of an existing FTA is one path toward multilateralizing, exemplified by EU enlargement (Baldwin, Evenett, and Low 2009).Multilateralizing can also apply to particular issues in FTAs, such as provisions on government procurement,3 or to a broader set of issues.The question of multilateralizing has become pertinent because of the depth and breadth of contemporary new-generation comprehensive FTAs that incorporate a multitude of issues beyond the traditional tariff reductions.Comprehensive FTAs may include the liberalizing of technical barriers to trade, such as certificates and standards (i.e., the requirement for foreign firms to adhere to national certificates or national standards of the importing country).Therefore, comprehensive FTAs are difficult to negotiate between countries with dissimilar economic structures and development levels, thus affecting their usability in advancing geopolitical aims by geo-economic tools, such as trade policy.
Extant research indicates that the level of harmonization among FTAs varies strongly depending on the member countries and the issues in question.Advanced, high-income countries tend to have more homogeneous FTAs.For example, 124 FTAs among OECD4 countries and five large emerging economies5 were found to have significant similarities as to the provisions on regulatory transparency (Lej arraga 2013).Similarly, the provisions on government procurement are fairly homogeneous in 47 FTAs of OECD countries, and many of these FTAs extend beyond the multilateral Agreement on Government Procurement (Ueno 2013).
In contrast, FTAs in the Asia-Pacific tend to have wider variation.Whereas they are typically simple bilateral FTAs geographically oriented outside of the region and increasingly embracing WTO-plus elements (Baldwin and Kawai 2013), the scope of these FTAs varies strongly from country to country.China is found to be cautious, as it prefers agreements that focus only on goods and services.In contrast, most of the FTAs of Singapore, and Japan are comprehensive WTO-plus agreements, especially those with developed economies (Baldwin and Kawai 2013, 10).
One area of variation in Asian FTAs is found in the rules of origin6 (Baldwin and Kawai 2013) that negatively impacts companies engaged in cross-border value chains.For importing and exporting within Asia, companies have to learn the specific rules of origin in force between two countries, thus imposing a burden that affects each bilateral trade connection (Baldwin and Kawai 2013, 14).Similar multiple rules of origin are in place in five "ASEAN þ 1" FTAs7 (Urata 2013) that are, further, considerably diverse in provisions on transparency, liberalization, and investment rules.Transparency varies in these FTAs as to whether the rules were made clear and public for implementation and available for businesses, and the level, schedule, and commitments of trade liberalization differ from country to country (Urata 2013, 14).
These diversities pose a challenge on negotiating geographically broader trade agreements.Governments are also affected by domestic pressures that hinder multilateralizing-which was, as well, an expected risk in the RCEP negotiations (Basu Das 2016).However, many Asian countries lack the pressure on governments from multinational enterprises potentially harmed by multiple FTAs (Capling and Ravenhill 2012, 280).In the case of comprehensive FTAs, harmonizing is difficult because of the complicated regulatory issues involved and the observed lack of business pressure; therefore, Baldwin (2014, 40) suggests that harmonizing should be started gradually, such as by addressing investment rules and customs cooperation first.
Whereas prior research found variation in Asia-Pacific FTAs in several respects, there is a need to explore how sustainable development issues are dealt with in these FTAs.This concerns the provisions on the protection of the environment and labor, human rights, and International Labour Organization (ILO) conventions, and how broadly and deeply these issues are included in the FTAs.Based on extant literature, it is assumed that most FTAs in the Asia-Pacific focus on traditional tariff liberalization.Some Asian countries have included environmental provisions in their FTAs related to climate change, yet these are originally designed by the EU (Morin, Brandi, and Berger 2019).Therefore, the question remains as to how China and its Asia-Pacific trade partners include sustainable development issues in regional FTAs, and whether is a level of similarity among these FTAs.
In what follows, findings are first presented from the comparison of the RCEP agreement with the TPP agreement.Possible differences between the two indicate variation in the emphases given to sustainable development issues.Second, China's bilateral FTAs with Singapore and Australia are compared with the FTA among Indonesia and Australia in order to explore the possible difference or similarity as to trade and sustainable development (TSD) issues.

SUSTAINABLE DEVELOPMENT ISSUES IN REGIONAL FTAS AND CHINA'S FTAS IN THE ASIA-PACIFIC
T he explored FTAs indicate some variation in the treatment of sustain- able development issues (i.e., whether and how provisions on environment or labor protection are included in the agreements).
The RCEP agreement contains 20 chapters and is a comprehensive FTA including commitments on goods, services, investment, intellectual property rights, competition, trade remedies, standards, e-commerce, and dispute settlement.Important parts of the agreement are the unified rules of origin, which are expected to considerably ease cross-border production chains of companies operating in the region (Asia Trade Centre 2020; RCEP 2020a).In comparison, the TPP agreement,8 as well as its successor, the CPTPP, is a comprehensive FTA that includes commitments on trade in goods, services, investment, labor mobility, government procurement, rules on transparency, and state-owned enterprises (Department of Foreign Affairs and Trade 2016).It contains chapters on the protection of the environment and labor rights that are enforceable by dispute settlement.
A substantial difference can be identified in the inclusion of sustainable development issues.The RCEP does not include provisions on sustainability at all, whereas the TPP/CPTPP does, similar to the EU bilateral FTAs with Asian countries (Interview #1).In the RCEP (2020b), the phrase "sustainable development" is mentioned only twice, and only in the preamble, not in the actual chapters of the agreement.The phrase "environmental protection" is mentioned twice, related to technical regulations (p.260) and transparency (p.264).The term "human rights" is not mentioned; conventions are not mentioned.In comparison, the TPP/CPTPP agreement includes Chapter 19 on labor (14 pages) that refers to ILO conventions, labor rights, labor laws, corporate social responsibility (CSR) related to labor, and areas of cooperation, such as human capital development, work-life balance, decent work, and social protection.It also includes Chapter 20 on the environment (26 pages) that refers to multilateral environmental agreements and notes the protection of the ozone layer and marine environment, the conservation of biodiversity, and the importance of CSR, low emissions, and conservation.It further includes Chapter 23, on development (five pages), which notes the importance of broad-based economic growth, enhancing the participation of women in the economy, as well as the promotion of education, science and technology, and research and innovation.
Therefore, the TPP/CPTPP resembles the EU FTAs in Asia, all of which include the chapter "Trade and Sustainable Development" with provisions on environmental and labor protection (Interview #2).The EU has promoted TSD issues in the negotiations with Asian countries although EU trade negotiators perceived the issues as being "new" to Asian economies (Interview #3).
China's bilateral agreements indicate a picture similar to RCEP.The original China-Singapore FTA (CSFTA) from 2008 did not include provisions on sustainable development or mentions of the environment or labor protection (CSFTA 2009).While this has changed in the amendment of the agreement from 2019, where a new Chapter 17 on the environment and trade has been added, it is a brief text of two pages that mentions "sustainable development" a few times referring to multilateral agreements and national regulation on the environment.This reflects the pressure of including TSD issues in contemporary FTAs, yet done in a superficial way compared to TPP/ CPTPP and EU FTAs in Asia.
The China-Australia FTA, in force since 2015, shows a strikingly similar picture.The FTA falls short of notes on TSD.It does not mention "sustainable," "sustainability," or the ILO at all.The word "environment" is mentioned a few times (pp. 90, 90, 92, 102).The other example, the FTA among Indonesia and Australia, is also not very different.The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) has been in force since 2020, and similarly does not include chapters on sustainable development, labor, or the environment (IA-CEPA 2020).
These findings are somewhat expected, as most of the participating Asia-Pacific countries are either emerging or resource-dependent economies.However, it could be assumed that Australia a developed economy would push for sustainable development in trade negotiations.Further, the distinction of RCEP from the TPP/CPTPP, where China is not a party, further underlines the different emphases in China-led trade blocs vis-a-vis other large trade blocs on TSD issues.

CONCLUSION
T o answer the questions of this essay, it is found, first, that the FTAs of China and the broader Asia-Pacific emphasize the traditional FTA design focusing on tariff reductions but also a number of other issues, such as services and investment.Yet sustainable development is not included in China's bilateral FTAs with Singapore and Australia or in RCEP, and TSD issues are also not emphasized in Australia's FTA with Indonesia.Second, this reflects the relatively dissimilar objectives of China as compared to the EU FTAs and the TPP/CPTPP, both of which emphasize sustainability.This indicates competing regionalisms (i.e., regional trade blocs with different emphases and normative aspirations in trade policy).Third, the process of multilateralizing regionalism does not look smooth as regards sustainable development in the Asia-Pacific.This is because of the complete lack of their inclusion in several FTAs and the differences in the scope in those that include mentions of the environment or labor.
It appears that China continues to push for trade agreements with the traditional design.In so doing, it also focuses on regional neighbors, as the current political relations with other major powers have been challenged.Because many regional neighbors are emerging economies, the mutual FTAs echo one another in the lack of sustainable development issues.
This essay therefore offers new understanding on the inclusion of sustainability in Asia-Pacific FTAs by sketching a regional emphasis of China's trade policy and the relative similarity of the agreements.In the debate on potentially competing regionalisms, the results suggest that the role of the EU FTAs and TPP/CPTPP as norm setters on sustainable development (e.g., Cuyvers 2014;Lechner 2016;Schwieder 2016) may be challenged by a shift toward a China-led regionalism in the Asia-Pacific where FTAs have other emphases to advance geopolitical aims.The globalization process is already confronted by the decoupling and derisking policies that, together with global political dynamics, might lead toward trade "wars" emerging from competing regionalism in the Asia-Pacific and more broadly.