Regional Comprehensive Economic Partnership (RCEP)

Author: Mihir P. Torsekar
International Trade Analyst

Change in 2015 from 2014:

  To view changing data, mouseover the graphic below.

  • U.S. total exports: Decreased by $18.6 billion (-5.1 percent) to $347.4 billion
  • U.S. general imports: Increased by $29.1 billion (3.4 percent) to $896.4 billion
  • U.S. trade deficit: Increased by $47.7 billion (9.5 percent) to $548.9 billion

The Regional Comprehensive Economic Partnership (RCEP) is a group of 13 countries in Asia that is currently (at the time of writing) negotiating a free trade agreement.1 While the United States is not a part of RCEP, the group includes significant U.S. trade partners, such as China, India, Japan, South Korea, and others. Although there is some overlap in membership between RCEP and the recently concluded Trans-Pacific Partnership (TPP), there are major economies that are part of one, but not the other (see figure RCEP.1 below, which also shows how the two groups’ memberships overlap with that of the Association of Southeast Asian Nations, or ASEAN).

Figure RCEP.1: While RCEP has 16 members and TPP has 12 members, 7 members belong to both RCEP and TPP (as of August 2016)

Figure 1: ASEAN, RCEP, and TPP member states

Source: Asia Foundation.

 

U.S. Total Exports

In 2015, U.S. total exports to the participants in the proposed RCEP fell by $18.6 billion to $347.4 billion (RP.1), as almost all the sectors under consideration recorded drops in exports.2> The largest decrease in export value occurred in the agricultural products sector, where U.S. exports fell by $8.2 billion (13.0 percent decrease from 2014) to $54.8 billion (table RCEP.1). This reduction was primarily led by a decline of $4.4 billion (24.7 percent) in exports of oilseeds; of $1.0 billion (33.5 percent) in exports of dairy products; and of $968 million (11.1 percent) in exports of cereals to RCEP countries (table RCEP 2).]

Table RP.1: RCEP: U.S. total exports, general imports, and merchandise trade balance, by major industry/commodity sectors, 2011–15

 
Million $
 
Item 2011 2012 2013 2014 2015 Absolute change,
2014–15
Percent
change,
2014–15
U.S. total exports:              
    Agricultural products 55,172 61,048 60,066 62,943 54,750 -8,193 -13.0
    Forest products 12,927 12,084 12,685 13,081 11,861 -1,220 -9.3
    Chemicals and related products 52,267 51,499 50,218 50,403 49,352 -1,051 -2.1
    Energy-related products 16,731 16,017 15,641 13,756 10,867 -2,888 -21.0
    Textiles and apparel 3,375 3,496 3,687 3,513 3,061 -452 -12.9
    Footwear 365 355 351 376 419 43 11.4
    Minerals and metals 35,799 32,699 32,873 30,822 26,882 -3,940 -12.8
    Machinery 32,438 33,087 32,482 33,842 32,943 -899 -2.7
    Transportation equipment 53,215 63,970 69,865 73,935 74,404 469 0.6
    Electronic products 67,393 68,032 68,537 70,164 70,470 307 0.4
    Miscellaneous manufactures 6,041 5,892 6,103 6,349 6,081 -268 -4.2
    Special provisions 6,797 6,512 6,253 6,824 6,345 -479 -7.0
        Total 342,519 354,691 358,760 366,007 347,436 -18,571 -5.1
U.S. general imports:              
    Agricultural products 28,423 31,458 29,840 33,017 32,228 -789 -2.4
    Forest products 10,044 10,842 11,172 11,973 12,621 647 5.4
    Chemicals and related products 66,425 69,566 68,975 72,874 73,056 182 0.2
    Energy-related products 9,864 9,479 10,999 10,719 8,216 -2,503 -23.4
    Textiles and apparel 73,872 74,152 77,094 79,275 83,156 3,881 4.9
    Footwear 19,955 20,953 21,603 22,543 24,020 1,477 6.6
    Minerals and metals 52,955 55,991 57,141 63,366 62,690 -675 -1.1
    Machinery 69,613 76,487 77,445 83,012 85,093 2,081 2.5
    Transportation equipment 91,342 112,522 112,945 117,661 125,685 8,025 6.8
    Electronic products 247,758 258,623 266,067 281,357 289,980 8,623 3.1
    Miscellaneous manufactures 69,340 72,204 74,519 77,626 84,510 6,884 8.9
    Special provisions 13,199 15,074 15,156 13,815 15,117 1,302 9.4
        Total 752,788 807,353 822,956 867,238 896,372 29,135 3.4
U.S. merchandise trade balance:              
    Agricultural products 26,749 29,590 30,226 29,925 22,521 -7,404 -24.7
    Forest products 2,883 1,241 1,513 1,107 -760 -1,867 (a)
    Chemicals and related products -14,158 -18,067 -18,757 -22,471 -23,704 -1,233 -5.5
    Energy-related products 6,868 6,538 4,642 3,037 2,652 -385 -12.7
    Textiles and apparel -70,498 -70,656 -73,407 -75,762 -80,094 -4,333 -5.7
    Footwear -19,590 -20,598 -21,252 -22,167 -23,601 -1,434 -6.5
    Minerals and metals -17,156 -23,292 -24,268 -32,543 -35,808 -3,265 -10.0
    Machinery -37,175 -43,400 -44,964 -49,170 -52,150 -2,980 -6.1
    Transportation equipment -38,127 -48,552 -43,080 -43,726 -51,281 -7,555 -17.3
    Electronic products -180,365 -190,591 -197,530 -211,193 -219,510 -8,317 -3.9
    Miscellaneous manufactures -63,298 -66,312 -68,416 -71,277 -78,428 -7,152 -10.0
    Special provisions -6,403 -8,562 -8,903 -6,991 -8,772 -1,781 -25.5
        Total -410,269 -452,662 -464,196 -501,231 -548,937 -47,706 -9.5

Source: Compiled from official statistics of the U.S. Department of Commerce for the 2011–15 period. These reflect all official revisions of previously published data up to June 2015 (accessed June 28, 2016). Note: Import values are based on Customs value; export values are based on free along ship value, U.S. port of export. Calculations based on unrounded data. Sectors are ordered by the level of processing of the products classified within each sector. aNot meaningful for purposes of comparison.

Table RP.2: RCEP: Leading changes in U.S. exports and imports, 2011–15

 
Million $
 
Item 2011 2012 2013 2014 2015 Absolute change,
2014–15
Percent
change,
2014–15
U.S. total exports:              
    Decreases:              
     Agricultural products:              
       Oilseeds (AG032) 13,106 18,365 16,308 17,717 13,337 -4,380 -24.7
       Dairy products (AG010) 1,946 2,013 2,796 3,113 2,071 -1,043 -33.5
       Cereals (AG030) 10,650 8,401 7,480 8,723 7,755 -968 -11.1
      Minerals and metals:              
       Copper and related articles (MM036) 4,497 4,506 4,013 3,578 2,415 -1,162 -32.5
       Unwrought aluminum (MM037) 3,255 2,852 2,695 2,231 1,813 -418 -18.8
    All other 309,065 318,554 325,468 330,645 320,045 -10,599 -3.2
        Total 342,519 354,691 358,760 366,007 347,436 -18,571 -5.1
U.S. general imports:              
    Increases:              
     Electronic products:              
       Semiconductors and integrated circuits (EL015) 22,916 20,996 21,259 23,723 29,213 5,490 23.1
       Telecommunications equipment (EL002) 55,289 64,453 72,509 79,941 84,112 4,170 5.2
        Motor vehicles (TE009) 39,096 48,919 50,768 49,451 54,144 4,694 9.5
        Furniture (MS009) 17,588 19,318 20,514 22,115 24,861 2,746 12.4
    Decreases:              
        Petroleum products (EP005) 6,626 7,326 8,766 8,702 6,788 -1,914 -22.0
    All other 611,274 646,341 649,140 683,305 697,254 13,949 2.0
        Total 752,788 807,353 822,956 867,238 896,372 29,135 3.4

Source: Compiled from official statistics of the U.S. Department of Commerce for the 2011–15 period. These reflect all official revisions of previously published data up to June 2015 (accessed June 30, 2016). Note: Import values are based on Customs value; export values are based on free along ship value, U.S. port of export. Calculations based on unrounded data.

U.S. exports to China and South Korea registered the biggest declines in in the agriculture sector; the value of oilseed exports to China declined by $4.0 billion, and the export value of cereals, oilseeds, dairy products, and animal feeds to South Korea fell by $1.5 billion during 2015.3

In 2015, all agricultural sectors included within the Food Agricultural Organization price index fell by double digits, with the largest price reductions occurring for sugar (21 percent), vegetable oils (19 percent), cereals (15.4 percent), and meat (15.1 percent).4 Global agricultural prices declined nearly 30 percent during 2011–15 because of the combined impact of growing world output and decreasing demand from leading importers, such as China (the Chinese decline in demand is consistent with the overall slowdown of growth in its domestic economy).5 

The second largest decline in U.S. total exports to RCEP was a $3.9 billion decrease in minerals and metals to $26.9 billion, largely due to a combined $2.6 billion reduction in copper and related articles, unrefined and refined copper, and unwrought aluminum, among other minerals and metals.

U.S. exports to China for various other commodities in this sector fell by a combined $9.7 billion, including copper and related articles (down $2.0 billion to $9.2 billion), unrefined and refined copper (down $556 million to $18 million), and unwrought aluminum (down $457 million to $1.3 billion), as Chinese construction activity declined. China has been the world's largest consumer of this sector's products since 2002, and lower demand stemming from the country's slowing economic growth placed downward pressure on consumption and unit values.6

U.S. General Imports

The $29.1 billion (3.4 percent) growth of U.S. general imports from RCEP to $896.4 billion was principally driven by electronic products, the largest import category from RCEP, which increased by $8.6 billion to $290.0 billion; miscellaneous manufactures (increasing by $6.9 billion to $84.5 billion); and transportation equipment (increasing by $8.0 billion to $125.7 billion). Overall expansion of U.S. general imports was offset by a $2.5 billion reduction in imports of energy-related products (see the “Energy and Related Products” webpage and the special topic chapter for detailed discussions on worldwide decline in energy prices).

During 2011–15, the electronic products category was the leading U.S. import sector from RCEP countries and accounted for one-third of total U.S. imports from the partnership in 2015. In particular, U.S. imports of semiconductors, integrated circuits, and telecommunications equipment from China accounted for the majority of the expansion in imports for this sector. China is the world's leading manufacturer of various consumer electronics, supplying 70 percent of U.S. electronic product imports in 2015. The telecommunications equipment subsector accounted for many of these products, with the release of the Apple iPhone 6s and 6s Plus in September 2015 contributing to a 30 percent increase in U.S. imports of cellphones during the second half of the year.7

U.S. furniture imports went up from $22.1 billion in 2014 to $24.9 billion in 2015—a 12.4 percent. This may be attributable, at least in part, to U.S. home sales trends; 2015 was the best year for single-family home purchases in the United States since 2007, a development that likely translated into heightened sales of furniture.8 U.S. imports of furniture in 2015 reached a three-year high, with Malaysia and Vietnam (both RCEP and TPP participants) supplying nearly 40 percent of these goods.9

Growth in U.S. general imports of transportation equipment resulted from greater demand for motor vehicles and associated parts, imports of which collectively grew by $4.7 billion to $80.7 billion in 2015. U.S. purchases of cars reached a record in 2015 amid cheaper gasoline, an improving labor market, and low interest rates, all facilitating the financing of vehicles.10

U.S. Trade Balance

The U.S. trade deficit with RCEP continued the growth trend seen during 2011–14, increasing by $44.5 billion to $520.7 billion. With the exception of energy products, the U.S. trade deficit with RCEP countries expanded across every sector during this time period. In large part, this reflected higher U.S. consumption of electronic products, miscellaneous manufactures, and transportation equipment, along with decreases in the value of U.S. total exports of agricultural products to RCEP countries. Growth in imports was largely influenced by the expansion of the U.S. economy in 2015, which translated into increased purchases of furniture, consumer electronics, and motor vehicles, the leading producers of which are based in RCEP participant economies. Reduced U.S. total exports of agricultural products are attributable to falling demand from leading global importers, such as China, and a surplus of global output.

 



1 Negotiations for RCEP started in 2012 and, as of September 2016, were still underway. The countries included within this partnership are Australia, Brunei Darussalam (Brunei), Burma, Cambodia, China, India, Indonesia, Japan, South Korea, Laos, Malaysia, New Zealand, the Philippines, Thailand, Singapore, and Vietnam.
2 Footwear was the only exception, registering a $57 million increase to $345 million.
3 Official statistics of the U.S. Department of Commerce (DataWeb) (accessed April 20, 2016).
4 Plimmer, “Global Food Prices,” January 14, 2016.
5 Terazono, “Agricultural Commodities,” August 12, 2015.
6 Sanderson, “China Stockpiles Intrigue,” April 5, 2016; Hammer, “China's Dominance,” August 2012.
7 Bartash, “Déjà vu,” October 6, 2015; Page, “iPhone,” October 26, 2015.
8 Soergel, “After 2015 Surge,” January 27, 2016.
9 GWMI, “Strong Increase,” March 4, 2016.
10 Spector, “U.S. Car Sales,” January 5, 2016.