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On Sunday, the leaders of 15 countries in the Asia Pacific region signed one of the largest trade agreements in history after eight years of negotiations. The treaty is called the Regional Integral Economic Association (RCEP) and, among other things, establishes new rules regarding trade in goods and services, cross-border investments and intellectual property. While it does not offer the same level of integration as the European Union or the Agreement between the United States, Mexico and Canada, the RCEP is seen as an important step to eliminate trade tariffs between the countries involved and to further increase Chinese influence. in Asia.
The RCEP was signed by ten members of the Association of Southeast Asian Nations (ASEAN) – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – and by Australia, China, Japan, New Zealand. and South Korea. The deal could have been even broader had India not decided to withdraw from the negotiations in 2019: the Indian government feared a significant increase in imports of cheap Chinese goods and believed it did little to encourage trade in services, a sector in which India is stronger than many other Asian countries.
Peter Petri, professor of international finance at Brandeis University (Massachusetts, USA), told the Financial times: “In some ways, this is the largest free trade agreement in history. It affects 30% of the world’s population ”.
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There are two particularly significant elements in the agreement. The first is related to the fact that it will no longer be necessary to enter into specific agreements between two states each time to eliminate tariffs on traded goods, as occurs within ASEAN; From now on, a manufacturer from a RCEP signatory state can freely trade with the other 14 countries of the agreement. The second is that the agreement is the first free trade agreement between China, Japan and South Korea, countries that do not always have relaxed relations: “The RCEP has allowed them to achieve something that would have been very difficult to achieve through political means, yes [questi tre paesi] they had to do it themselves, ”said Petri.
Leaders of the 15 countries involved in the negotiations, plus ASEAN, in videoconference during the signing ceremony (VNA via AP)
The RCEP, however, is not an ambitious treaty like the TTP, the Trans-Pacific Partnership, one of the largest trade agreements ever signed, signed in 2015 by 12 countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States) from where, however, the United States withdrew in 2017 at the behest of President Donald Trump. The RCEP foresees the elimination of 90% of tariffs, compared to almost 100% of the TTP, it does not deal almost at all with agriculture and only partially with services, and does not foresee the imposition of significant rules on the standards that are guaranteed for certain products. . The biggest problem, however, is the absence of India, which would have made the deal even broader and, above all, could have balanced the excessive Chinese power.
There is another important consideration that must be made. Most likely, the treaty will further reduce US influence in the region, a trend that had already been confirmed with Trump’s withdrawal from the TTP. It is also possible that the trade war between China and the United States, which began in 2018, favored trade and investment between Asian countries and accelerated negotiations on the RCEP. Today, the United States is outside of the two largest and most important trade agreements involving Asian countries.
Now that it has been signed, the RCEP must be ratified by the countries involved in order to enter into force, according to the procedures established in each country. The idea of many observers is that the treaty is likely to shape the future of trade in Asia and push China, Japan and South Korea, three very strong manufacturing and technology countries, to speed up negotiations on a free trade agreement.
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