[ad_1]
Jakarta, CNBC Indonesia – A total of 15 countries in Asia and the Pacific have signed the largest free trade agreement in the world. This agreement is seen as China’s way of expanding its influence in the world economy.
The agreement is the Regional Comprehensive Economic Partnership (RCEP) that covers 10 countries in the ASEAN region along with China, Japan, South Korea, New Zealand and Australia, with a share of around 30% of world GDP.
However, India did not sign the RCEP. The country of Bollywood was absent during the virtual signing and withdrew from the agreement last year for fear of cheap Chinese products entering the country.
First proposed in 2012, the deal was finally sealed at the end of the Southeast Asia Summit to restore an economy ravaged by the coronavirus (Covid-19) pandemic.
“In the current global situation, the fact that the RCEP has been signed after eight years of negotiations brings a ray of light and hope through the clouds,” said Chinese Premier Li Keqiang after the virtual signing on Sunday (15 / 11/2020).
“This clearly shows that multilateralism is the right path and represents the right direction for the world economy and human progress.”
An agreement to lower tariffs and open up intra-bloc trade in services without interference from the United States is seen as an alternative for China to find a replacement for a trade agreement with the now-defunct United States.
Alexander Capri, a trade expert at the National University of Singapore Business School, said RCEP reinforces China’s broader regional geopolitical ambitions around the Belt and Road Initiative (BRI / OBOR).
“It’s kind of a complementary element,” Capri said, referring to a typical Beijing investment project that envisions China’s infrastructure and influence around the world.
The countries that signed the agreement hope that the RCEP will help reduce the cost of the economy crippled by the pandemic. Indonesia recently fell into a recessive abyss, while the Philippine economy contracted 11.5% annually in the latest quarter.
Iris Pang, ING’s chief economist for China, believes that RCEP could help Beijing reduce its dependence on foreign markets and technology. Both elements are currently plagued by a deepening rift with Washington.
This agreement further alienates the United States from the region with the fastest growing economy in the world. Previously, the President of the United States, Donald Trump, also removed Washington from the Trans-Pacific Partnership (TPP), which was previously drafted by President Obama.
Although Joe Biden was elected president in last week’s election, analysts say the U.S. is unlikely to join RCEP or the Trans Pacific Partnership (TPP) right away due to its focus on addressing Covid-19 in House.
Meanwhile, India, as described above, withdrew from the RCEP talks in November last year. However, ASEAN leaders say the door remains open for anyone from Asia Pacific to join.
[Gambas:Video CNBC]
(Friends friends)
