Depth, trade, and welfare analysis of the CPTPP and RCEP: Does deepening RCEP to CPTPP standards make a difference?

The preferential trade agreements CPTPP and RCEP from the Asia-Pacific region are frequently quoted as good examples of plurilateralism with sustainable trade and development policies that go beyond WTO-mandated policy areas. The general opinion is that CPTPP is comparatively deeper than RCEP. China is a member of RCEP and an applicant to join CPTPP. I examine the trade and welfare impacts of CPTPP and RCEP by considering their levels of deepness as measured by the provisions they include, with special attention to China. I measure the depth of trade agreements by applying the machine learning clustering algorithm “kmeanspp” to the updated deep trade agreements database by World bank. The welfare impacts are then evaluated using general equilibrium modeling within the structural gravity framework. Contrary to general opinion, the measurement shows that RCEP is as deep as CPTPP based on the provisions they currently contain. Deepening RCEP to CPTPP standards does not change its deepness as considered by the clustering algorithm. When depth is considered, the trade-creating effect of both the CPTPP and RCEP decreases by 42% compared to when depth is not considered. China’s welfare gain from RCEP is 0.08%, remains the same as 0.08% if it joins CPTPP. If the USA joins CPTPP, China’s welfare gain from RCEP fall to 0.07%.