Competitive Mega-Regionalism: The Trilateral Geo-Economic Power Play by the United States, China and the European Union

Author: 

Xianbai Ji

PhD defended at: 

S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore

Summary: 

Free trade agreement (FTA) is an increasingly important platform for countries to pursue reciprocal trade liberalisation outside the multilateral framework. The latest wave of regionalism took shape of mega-regionals (mega-FTAs) – deep and expansive trade alliances between countries or regions with a dominant share of world economy, trade and population. Key mega-FTAs include the US-led Trans-Pacific Partnership (TPP), China-backed Regional Comprehensive Economic Partnership (RCEP) and the EU-initiated Transatlantic Trade and Investment Partnership (TTIP). The fact that these three unprecedented mega-FTAs, championed by different trading powers, burst upon the global scene within a rather circumscribed period of time (early 2010 to mid-2013) is intellectually puzzling.

This dissertation explains why and how the three mega-FTAs suddenly came into being. Unlike existing regionalism scholarship which tends to ‘vertically’ analyse FTAs as separate entities arising out of autonomous government decisions to entertain domestic concerns, this study undertakes a ‘horizontal’ diffusion-oriented research agenda to investigate the causally linked calculus of major power participation in the on-going mega-regionalism at the international strategic level. It conceptualises mega-FTA as a geo-economic strategy for the US, China and the EU to compete against each other, economically, politically and legally. It is argued that the TPP allowed the US to reap economic benefits from freer trade, demonstrate regional leadership and disseminate a favourable trade temple at the direct expenses of China. The disadvantaged China was then pressurised to respond in kind by launching a countervailing mega-trade pact of its own, i.e. RCEP, to level the playing field. The US’ TPP and China’s subsequent resorting to RCEP as its defence mechanism generated cumulative negative externalities along economic, political and legal dimensions for the EU, forcing the bloc to abandon its long-standing multilateralism-centred trade policy paradigm to enter into TTIP negotiations. The move by the US, the counter-move by China and the counter-countermove by the EU eventually gave rise to the mega-regionalism as we have observed in recent times.

A mixed method research design involving quantitative, qualitative and perceptual perspectives is adopted by this dissertation. Great power competition in the economic realm is captured by two formal approaches to international political economy. The computational general equilibrium simulations using the Global Trade Analysis Project model suggest that the logic of economic competition is premised on the international distributional effects of mega-FTA in terms of creating trade among mega-regional participating economies while diverting trade away from non-members. The modelling results inform a follow-up game theoretical analysis to help visualise the way in which the economic competition unfolded in payoff matrices. Case study and content analysis methods are engaged to put up my arguments about political/legal competition and sketch out the broader historic backgrounds against which the genesises of mega-FTAs must be viewed. In a final step, a perception survey soliciting representative thinking of Asian opinion leaders was conducted to confirm the external validly of the main findings of the dissertation. The triangulation of data and arguments provide stronger evidence to the present dissertation’s conclusion that the trilateral geo-economic power play on the part of the US, China and the EU is the key cause and driver of the latest wave of mega-regionalism.

Defended: 

2018