The Asia-Pacific region includes several mega free trade agreements:
ASEAN (Association of Southeast Asian Nations) is a regional intergovernmental organization comprising ten countries in Southeast Asia (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam). In 2021, ASEAN members have a combined GDP of $3.11 trillion and a population of 673 million.
CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) is a free trade agreement signed by 11 countries in the Asia-Pacific region, including Japan, Malaysia, Vietnam, Australia, Singapore, Brunei, New Zealand, Canada, Mexico, Peru, and Chile. The CPTPP covers a market of 495 million people with a combined GDP of $13.5 trillion in 2021. The United States was originally a participant in the Trans-Pacific Partnership (TPP) negotiations, but in January 2017, former US President Trump withdrew the US from the agreement. The Biden administration has indicated no interest in rejoining CPTPP. Additionally, China is actively seeking to join CPTPP.
RCEP (Regional Comprehensive Economic Partnership) is a free trade agreement signed by 15 countries in the Asia-Pacific region, including China, Japan, South Korea, Australia, New Zealand, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam. In 2021, RCEP members collectively represented a market of 2.3 billion people with a combined GDP of $26.3 trillion. India was an RCEP member but withdrew from the agreement due to concerns about import competition with China.
IPEF (Indo-Pacific Economic Framework for Prosperity) is a US-led economic cooperation framework that aims to “link major economies and emerging ones to tackle 21st-century challenges and promote fair and resilient trade for years to come.” IPEF is NOT a traditional free trade agreement, and it does not address market access issues like tariff cuts. Instead, IPEF includes four pillars: trade, supply chains, clean economy, and fair economy. IPEF members in the Asia-Pacific region include the United States, Japan, Australia, New Zealand, South Korea, India, Fiji, Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. The IPEF is designed to be flexible, meaning that IPEF partners are not required to join all four pillars. For example, India chooses not to join the trade pillar of the framework. In 2021, IPEF countries collectively represented a market of 2.1 billion people with a combined GDP of $23.3 trillion. The potential economic impact of IPEF remains too early to tell.
Notably, ASEAN, CPTPP, RCEP, and IPEF members play significant roles in the world textile and apparel trade. Specifically:
ASEAN and RCEP members have established a highly integrated regional textile and apparel supply chain. For example, a substantial portion of ASEAN and RECP members’ textile imports came from within the region.
ASEAN and RCEP members’ supply chain connection with China has substantially strengthened over the past decade. In contrast, the US barely participated in Asia-based textile and apparel supply chains. For example, other than CPTPP, the US accounted for less than 2% of ASEAN, RCEP, and IPEF members’ textile imports in 2021.
ASEAN and RCEP members also hold significant market shares in the world textile and apparel export (over 50%). Meanwhile, the US and EU are indispensable export markets for ASEAN and RCEP members.
Because of the United States, IPEF represented one of the world’s largest apparel import markets (i.e., 33.7% in 2021, measured in value). Similarly, in 2022, about 26% of US apparel imports came from current IPEF members. Should IPEF address market access issues, it could potentially offer significant duty-saving opportunities for textile and apparel products.
Additionally, UK’s membership in CPTPP may have a limited direct impact on the textile and apparel sector, at least in short to medium terms. For example, current CPTPP members only accounted for about 6% of UK’s apparel imports in 2021.
9 thoughts on “Mega Trade Agreements in the Asia-Pacific Region and Textiles and Apparel Trade (Updated April 2023)”
Getting to see how different trade agreements are formed and how they affect international relations made this really insightful to me. Additionally, seeing the effects of the US or India pulling out of trade agreements going forward will be really interesting as it makes it clear how this has affected those countries as well as the trading bloc as a whole. This also indicates how significant or insignificant they are to the trading bloc. Additionally, I found it really interesting that despite China not being part of the CTPPP, their textile imports still increased significantly for that trade agreement. I also noted that RCEP is an extremely export market both for textiles and apparel. This is likely due to them having a number of Asian countries, some of which specialize in textiles and some in apparel.
Great thought. I encourage you to watch the video also, which provides an in-depth explanation for these different trade agreements. Also, trade is often used as a foreign policy tool. For example, believe it or not, UK will join CPTPP hopefully later this year. The economic impact will be small but it is mostly about non-economic and strategic considerations. https://www.reuters.com/world/why-is-britain-joining-trans-pacific-trade-pact-2023-03-31/
I agree, it is interesting that China doesn’t fall into CTPPP numbers despite the amount of Asian countries being represented. The amount of textile imports is why I see the US looking to source more in the Western Hemisphere in years to come.
When initially reading about the trade agreements I immediately noticed how the US accounted for such a small percentage in major regions they are beginning to become a part of now. By 2022 IPEF comprised of 26% of apparel markets in the US which is a relatively rapid growth compared to other agreements with more countries comprised in their total. I wonder where the US will turn their sourcing and supply chain in years to come as technology and tariffs continue to change in years to come.
I was also surprised at how the US was a small percentage in big regions. As technology changes I would hope the US would focus more efforts on the western hemisphere but they could look to other Asian countries as those are the most labor abundant.
It’s interesting to see all the different kinds of trade agreements and how many overlap with one another. I was surprised to see that the US is only apart of IPEF given how they have such a big consumer market but they are the leaders in this agreement which makes sense given how many countries are involved. The percent of textile imports from China has increased steadily over the years with all agreements, but textile imports from the US has also been increasing over the years especially with CPTPP so I wonder if this will continue to increase in the future and if other countries will move to sourcing from the US.
It was interesting to see this video investigate the fast fashion industry’s effects on the environment. The fashion industry contributes 10% of the world’s carbon emissions, which is more than international travel and maritime shipping combined in terms of emissions. This is one interesting fact that the video presents. A significant amount of energy, water, and waste are consumed during the production of clothing, especially fast fashion, which results in greenhouse gas emissions and environmental damage. The industry is attempting to lessen its impact on the environment in a number of ways, including the use of sustainable materials and recycling programs, which are highlighted in the video.
It will be interesting to see the lasting effects of Asian region agreements such as ASEAN and RCEP. Especially with RCEP covering so many countries within the region, it would seem that these agreements could be strengthening the “flying geese model” seen in the region. By opening trade barriers across Asia, there is less and less dependence on outside sourcing, encouraging “by Asia, for Asia.”
I also had the thought that these agreements could also be another reason why the US’s Section 301 tariffs have so far been ineffective at addressing China’s unfair trade practices. China, though it does export a great amount to the US, has so many tariff-free agreements with neighboring countries to fall back on that they are likely able to minimize financial impact even further.
One of my favorite aspects of the FASH455 course has been developing a deeper knowledge of trade lingo and patterns, especially like the information in posts such as these. Learning about the acronyms for each region has helped me better understand what is comprised of those areas and how they function. Beyond learning about the specific regions, it has been interesting to gain wisdom on their inter-relation. For example, the ASEAN and RCEP members have become much more integrated in both their textile and apparel supply chains. Many of their textile imports have come from within the region. It is worth noting though that even though they may be integrated, the RCEP has still managed to surpass the ASEAN in terms of both import and export success. Furthermore, what particularly caught my eye, was how their sourcing from China has outpaced that of the United States.