ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Geoeconomics of Trade Agreements and the Pacific Rim

The Pacific Rim region is a dynamic geoeconomic space of great power competition where many trade agreements and economic blocs have evolved over the last few decades. This article evaluates the insertion of the four economies of the United States, China, India, and the European Union to understand the evolving architecture of trade relations in this region.

 

Trade agreements are a structural feature of the contemporary world economy and have several benefits. They produce welfare gains for consu­mers, encourage long-term investments, and provide a predictable institutional environment for trade. Trade agreements between economies in the same geographical region help to establish regional value chains and boost intraregional trade. Such agreements align the economic interests of its members, increase their bargaining power internationally (Campos 2016), and help in the geostrategic projection of interests (Wigell 2016) at the world level. Such trade agreements are also stepping stones to higher levels of econo­mic integr­ation between member states. Trade integration also produces benefits in the areas of regional peace and security through increased interdependence between member economies of a trade agreement by aligning their interests. Evidence from previous trade agreements points to the instru­ment­ality of convergence in econo­mic interests in establishing long-term peace between member states (Lee and Pyun 2009). Argentina and Brazil—two states that were involved in a nuclear arms race after the World War II—changed the status quo by pooling their economic interests that evolved into the Common Market of the South, that is, Mercosur (Campos 2016; Junior et al 2015). The European Coal and Steel Community—the predecessor of the European ­Union (EU)—also aimed at bringing toge­ther rival and war-ravaged states of ­Europe through trade integration (European Union 1950). Overall, trade agreements play an important role in the area of geoeconomics, which is defi­ned as “the dynamic economic ­relationships of countries shaped by a multitude of intervening factors such as geography, politics and business” (Munoz 2017).

This article proceeds by first providing a background on the geoeconomic space of the Pacific Rim and the instrumentality of trade agreements from a geostrategic perspective. Subsequently, the bilateral and region-wide insertion of the two largest economies of the world located in the Pacific Rim, namely the United States (US) and China, and the two large soft powers from outside the Pacific Rim ­region, namely India and the EU, will be critically discussed. Some of the key latest developments in this area, especially about China and the Regional Comprehensive Economic Partnership (RCEP), will be contextualised for this purpose alongside the identification of key aspects of geoeconomic discourses. The concluding section provides the major understandings that emerge from a comparative perspective.

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Updated On : 15th Feb, 2022
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