U.S. businessman and trade experts react to new global agreement
2020 has been a good year for Vairex Air Systems in Boulder, Colorado. A very good year.
"Our business has exploded," said Ski Milburn, Vairex C.E.O. "We're double what we were last year."
His company makes air compressors for fuel cells that power electric vehicles. And power forklift trucks, indispensable in warehouses that make pandemic era online retail possible in countries like China.
"You always thought that this was going to get big in China but you didn’t know when, well it looks like the when is kind of like now," Milburn said laughing.
He also gets lots of his parts from China.
"China is embedded in the global trading system, the global supply chain system, at an incredible level," Milburn said.
Those systems are about to be transformed by the new RCEP trade agreement, which aims to lower tariffs and consolidate supply chains among 15 mostly Asian countries including China. The deal covers nearly a third of the world’s population and about 30 percent of global GDP.
"The signing of RCEP will strongly promote regional economic recovery and boost global economic growth," said Zhao Lijian, Chinese Ministry of Foreign Affairs spokesperson recently.
"I'd say this is a great step forward," said Doug Allen who teaches at the University of Denver’s Daniels College of Business. He said the agreement comes after a period when many U.S. businesses, struggling with tariffs, were forced to relocate some of their manufacturing out of China.
"This time frame of uncertainty has actually I think helped companies move beyond what was comfortable for them," Allen said.
"We're seeing a lot of regionalization and localization," Milburn said.
Businesses are increasingly putting production, he added, near their growing bases of consumers, China in his case, which he argues RCEP will only spur him to do.
"You can't ignore the biggest market in the world," Milburn said. "The only way to be economically viable is to go there, and you were gonna go there anyway. This just makes you go sooner."
Gone are the days, he pointed out, when the U.S. was top dog when it came to trade and called all the shots. He says RCEP was totally predictable.
"It was almost inevitable that was going to happen and it was going to happen without us, if we didn't participate," Milburn said.
"I think what the RCEP does though is now provides more fuel for that regional diversification model," Allen said.
"I was actually pleased to see multilateral agreements are not dead," said Karen Gerwitz, World Trade Center Denver President, when asked about the new deal. She said with the right worker protections, those kind of agreements can help economies run more smoothly. She calls this one forward-thinking and strategic.
"Someday in our lifetimes I hope that China and the U.S. will enter into an agreement," Gerwitz said. "I think that will be something that we should truly celebrate, but we'e far from that today."
Global collaboration has been strengthened, at least in one part of the world. The question now is how will the U.S. adjust to this new reality?