The Regional Comprehensive Economic Partnership (RCEP) comprises 15 countries from the Asian and Pacific regions. After eight years, they have finally signed the deal on forming the world’s largest regional free-trade agreement.
Widely considered as an extension of China’s influence in the region, the 15 nations finally signed off on the deal after 8 years of negotiation. The signing of the deal took place at the Association of Southeast Asian Nations (ASEAN) summit. Vietnam served as the virtual host of the event.
On Sunday, Malaysia’s Trade Minister Azmin Ali said reporters said that they would sign the deal on Sunday. He added that the deal would be the apex for eight years of negotiating with blood, sweat, and tears.
The deal signed on Sunday covers countries that account for nearly a third of the global GDP and world population. On the completion of the deal, Vietnamese PM Nguyen Xuan Phuc said, “The completion of negotiations is a strong message affirming Asean’s role in supporting the multilateral trade system. He also said that the agreement would contribute towards “developing supply chains that have been disrupted due to the pandemic as well as supporting economic recovery.”
Chan Chun Sing, Singapore’s Minister of Trade and Industry said that a minimum of six ASEAN countries in addition to three non-Aseann partners must ratify RCEP for it to come into force. He added that Singapore plans to approve the deal ‘in the next few months’.
According to reports, a lot of the involved countries are going to benefit from the new trade pact. It is said that the deal would reinforce the economies that are affected due to the pandemic. This would be done through reducing tariffs, strengthening supply chains with common rules of origin, and codifying new e-commerce rules.
India and the US not part of the RCEP
One big exclusion from the deal is the US. President Donald Trump withdrew from talks on a separate Asia-Pacific trade deal, called the Trans-Pacific Partnership (TPP) in 2017, shortly after he took the presidential oath.
The original plan was to include 12 countries and former President Barack Obama was in full support of this plan. The plan was to go against China in the trade game. The ball will now be in Biden’s court as it is still uncertain how he would tackle this situation.
Another big exit from the deal was that of India. Prime Minister Narendra Modi said that he exited the deal as he was afraid of the repercussions this deal would have on common Indian people. Since then other countries have called on India to rejoin.
According to a statement by the Singapore’s Ministry of Trade and Industry, other benefits of the RCEP deal include:
- A tariff elimination of at least 92% on traded goods among participating countries
- Strong provisions to address non-tariff measures
- Enhancements in areas such as online consumer and personal information protection, transparency, and paperless trading
- Simplify customs procedures while at least 65% of services sectors will be fully open with increased foreign shareholding limits.