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What is RCEPthe trade agreement signed by China and fourteen other countries in the Asia-Pacific area?
Acronym for Regional Integral Economic Association, the RCEP was signed during a regional summit in Vietnam’s capital Hanoi. The trade agreement, both in terms of relevance and the number of states involved, is the largest ever conceived in history and it could favor the expansion of the area of influence of the Beijing government.
What is the new RCEP trade agreement and what does it provide?
As Western economies continue to introduce new tools to contain the economic disruption caused by the ongoing pandemic, a part of the world is already working to redefine it for its own benefit. power relationships that will characterize the next decades.
This part of the world is Asia which, on Sunday, saw thirteen countries, in addition to Australia and New Zealand, come together to sign an unprecedented trade agreement in History. The text, approved by officials of the fifteen economies involved, defines the largest trading block in the world, with 2,200 million people involved, a third of the world’s population, and an aggregate GDP estimated at 26,200 million dollars, 30% of the global one.
Speculation about the definition of an agreement of this magnitude has been pursued since 2012, but the official has just arrived. The new alliance, which represents a kind of Copernican revolution in the field of trade relations in the Asian area, provides for the elimination of a series of tariffs more than ten years thanks to the elimination of customs barriers, as well as a list of twenty new rules which will affect the trade of goods, public procurement, investment and electronic commerce.
The measures, in fact, they will simplify the trade among the acceding countries, helping to develop supply chains interrupted during the pandemic and, consequently, favoring economic recovery.
In addition to the aforementioned Australia and New Zealand – the only non-Asian countries on the list – are the great powers in the area, such as China, Japan and South Korea. Also present are Malaysia, Brunei, Singapore, Vietnam, Laos, the Philippines, Thailand, Cambodia, Myanmar and Indonesia. Absent, for now, is a pivotal player like India who, observers say, could re-enter the deal at a later time.
Because China will be favored by RCEP
Signing the new free trade agreement implies the unprecedented alliance between China, Japan and South KoreaLeading economies on the Asian continent that had never collaborated in these terms.
But RCEP is above all a geopolitical triumph of the Beijing government which, thanks to the new agreement, will be able to significantly reduce China’s dependence on Western technologies. This process is considered essential due to the progressive deterioration of relations between China and the United States during the presidential term of Donald Trump.
Thanks to the RCEP and the protectionist turn of the United States – the tycoon has also withdrawn the country from the Trans-Pacific Partnership, a free trade agreement between the Pacific States – China will be in the position of strengthen your commercial ties in the area, effectively filling that void created by the US shutdown.
Although it is too early to draw long-term prospects, some observers argue that the new system of trade alliances could lead Asia’s main economy to overtake the United States. The conclusions, however, will have to wait as would political president Joe Biden. radically change the international approach of the US in the next four years.
