Updated: November 15, 2020 5:23:44 pm
The container ship Maersk Eindhoven, operated by Maersk Line Ltd., is moored alongside gantry cranes at a shipping terminal in Yokohama, Japan, on Sunday, July 19, 2020. Japanese exports fell more than 20% for the third consecutive month. even as key markets began to reopen due to virus shutdowns. Photographer: Toru Hanai / Bloomberg
Asia Pacific nations, including China, Japan and South Korea, signed the world’s largest regional free trade agreement on Sunday, encompassing nearly a third of the world’s population and gross domestic product.
Senior officials from 15 countries that also include Australia, New Zealand, and the 10-member Association of Southeast Asian Nations signed the Regional Comprehensive Economic Partnership, or RCEP, nearly a decade in the making, on the final day of the 37th Summit of organized Asean. virtually for Vietnam.
“The completion of the negotiations is a strong message that affirms ASEAN’s role in supporting the multilateral trading system,” Vietnamese Prime Minister Nguyen Xuan Phuc said before the virtual signing ceremony. The deal will help “develop supply chains that have been disrupted due to the pandemic, as well as support economic recovery,” he said.
A minimum of six ASEAN countries, plus three non-ASEAN partners, must ratify the RCEP for it to enter into force, Singapore’s Trade and Industry Minister Chan Chun Sing told reporters after signing. . Singapore plans to approve the deal “in the next few months,” he said.
Supporters of the trade pact, which covers 2.2 billion people with a combined GDP of $ 26.2 trillion, said it will bolster economies weakened by the pandemic by cutting tariffs, strengthening supply chains with common rules of origin and codify new e-commerce rules.
The benefits of the agreement include the elimination of tariffs of at least 92% on goods traded between participating countries, as well as stricter provisions to address non-tariff measures and improvements in areas such as the protection of personal information and data. online consumer, transparency and commerce, according to a statement issued Sunday by the Singapore Ministry of Commerce and Industry. It also includes simplified customs procedures, while at least 65% of the service sectors will be fully open with higher limits on foreign participation.
RCEP: World’s Largest Trade Agreement
Leaving India
Negotiators brought the deal to the finish line after India surprised participants late last year by abandoning the deal. Prime Minister Narendra Modi said withdrew due to concerns on how RCEP would affect the livelihoods of Indians, particularly the most vulnerable. However, India will be allowed to rejoin the trade pact.
“The clause allowing India to join at a later date is symbolic and shows China’s desire to build economic bridges with the region’s third-largest economy,” said Shaun Roache, chief Asia Pacific economist at S&P Global Ratings.
Malaysia recognizes the difficulties India faces, Prime Minister Muhyiddin Yassin said in a speech on Sunday.
“However, we wish to express our continued support and welcome your future accession to the RCEP.”
Whether the RCEP changes regional dynamics in China’s favor depends on the US response, experts said. The agreement underscores how US President Donald Trump’s 2017 decision to withdraw from a different Asia Pacific trade pact, the Trans-Pacific Partnership, or TPP, diminished America’s ability to offer a counterweight to growing economic influence. China regional.
Biden’s challenge
That challenge will carry over to President-elect Joe Biden if, as expected, the winner of the November 3 election is officially named. It is not yet clear how Biden’s team will approach trade deals and whether it will attempt to re-enter the 11-nation TPP.
The RCEP signing comes as Southeast Asian nations experience uneven recoveries from the coronavirus pandemic.
Governments across the region have been negotiating travel routes and bubbles in fits and starts as officials weigh health risks against economic needs. Malaysia, Indonesia and the Philippines are among those still facing high numbers of virus cases, while Singapore and Vietnam have so far successfully prevented further outbreaks.
Japan is seeking the pact to be a catalyst for its post-coronavirus economy, Japanese Trade Minister Hiroshi Kajiyama told reporters on Sunday.
“Through the removal of tariffs, I think there will be a major impact on improving Japan’s exports and making the region’s supply chains more efficient,” he said. “I firmly believe that we are building free and fair economic rules by introducing new rules on the free flow of data and banning technology transfer claims, as well as protecting intellectual property.”
The agreement will make the exports of participating countries more competitive and create an integrated market for China and regional nations, said Chan from Singapore.
“In recent years, there have been several ups and downs and it certainly hasn’t been an easy journey,” he said. “At one point, prospects for concluding the deal were shaken by geopolitical and domestic concerns. We have all had to make difficult concessions to move the negotiations forward. “
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