This past week has been a momentous one in the world of global trade. In Asia the 10 countries that comprise the Association of Southeast Asian Nations (Asean) signed a massive regional trade deal over the weekend with China, Japan, South Korea, Australia and New Zealand. It instantly becomes the world’s largest trading bloc – bigger than that of the European Union or North America.
Elsewhere, an agreement that escaped most global headlines was made last week between six nations in the western Balkans. The deal established a common regional market that includes the free movement of goods and people. It’s a stunning development when you consider that the new free-trade area would comprise much of formerly war-torn Yugoslavia, excluding EU members Croatia and Slovenia.
It’s hard to argue that these two regional deals are a bad thing. Pulling historic enemies closer together – whether it’s China and Japan or Serbia and Kosovo – can only be a positive. But they’re also noteworthy for who is not involved. Asia’s free-trade deal sidelines the US, which pulled out of the rival Trans-Pacific Partnership (TPP) early on in the Trump administration, a deal that would have helped the US to counteract China’s economic influence in the region. And the western Balkans declaration, of course, doesn’t include the European Union. Though the EU openly encouraged the deal, its creation is also in reaction to Balkan nations growing tired of waiting for EU membership.
That the US and EU are on the outside looking in is significant. Both can still reverse their course – the US could rejoin TPP and the EU could be more open to the Balkans – but this seems unlikely. The two powers have long shaped rules of global free trade; they now risk letting that privileged role slip from their grasp.