The Prime Minister of Vietnam chairs the IV Regional Summit of Comprehensive Economic Partnership
Hanoi:
Fifteen countries signed an extensive Asian trade deal on Sunday seen as a major blow to China in expanding its influence.
The Regional Comprehensive Economic Association (RCEP), which includes 10 Southeast Asian economies along with China, Japan, South Korea, New Zealand and Australia, is the world’s largest trade pact in terms of GDP, analysts say.
First proposed in 2012, the deal was finally sealed at the end of a Southeast Asian summit as leaders push to get their pandemic-hit economies back on track.
“I am happy that after eight years of complex discussions, today we officially conclude the RCEP negotiations,” Vietnamese Prime Minister Nguyen Xuan Phuc said before the virtual signing.
The deal to cut tariffs and open up intra-bloc trade in services does not include the United States and is seen as a China-led alternative to a now-defunct Washington trade initiative.
RCEP “solidifies China’s broader regional geopolitical ambitions around the Belt and Road initiative,” said Alexander Capri, a trade expert at the National University of Singapore Business School, referring to Beijing’s flagship investment project. It envisions China’s infrastructure and influence around the world.
“It’s kind of a complementary element.”
But many of the signatories are battling severe coronavirus outbreaks and also hope that RCEP will help mitigate the crippling economic cost of the disease.
Indonesia recently fell into its first recession in two decades, while the Philippine economy contracted 11.5 percent year-on-year in the latest quarter.
“Covid has reminded the region why trade is important and governments are more anxious than ever for positive economic growth,” said Deborah Elms, executive director of the Asian Trade Center, a Singapore-based consultancy.
“RCEP can help you get there.”
India absent
India withdrew from the deal last year over concerns about cheap Chinese goods entering the country and it will be a notable absence during Sunday’s virtual signing.
You can join at a later date if you wish.
Even without India, the agreement covers 2.1 billion people, and RCEP members account for about 30 percent of global GDP.
Fundamentally, it should help reduce costs and make life easier for companies by allowing them to export products anywhere within the block without meeting separate requirements for each country.
The agreement touches on intellectual property, but environmental protections and labor rights are not part of the pact.
The agreement is also seen as a way for China to write the rules of trade in the region, after years of US withdrawal under President Donald Trump, which have seen Washington withdraw from a trade pact of its own, the Trans-Pacific Partnership (TPP). )).
Although US multinationals will be able to benefit from RCEP through subsidiaries within member countries, analysts said the deal may cause President-elect Joe Biden to reconsider Washington’s commitment to the region.
This could see the potential benefits for the United States from joining the successor agreement to the TPP, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), said Rajiv Biswas, APAC chief economist at IHS Markit.
“However, this is not expected to be an immediate priority issue … given the considerable negative response to the TPP negotiations from many segments of the US electorate due to concerns about the loss of US jobs in Asian countries,” added.
(Except for the headline, this story has not been edited by NDTV staff and is posted from a syndicated channel.)
.
