Fifteen economies in the Asia-Pacific region formed the world’s largest free trade agreement, one backed by China and excluding the United States.
The signing of the Regional Comprehensive Economic Partnership (RCEP) at a regional summit in Hanoi is another blow to the agreement promoted by former US President Barack Obama, from which Trump left in 2017. The Regional Comprehensive Economic Partnership (RCEP) could strengthen China’s position as a partner country. Economic with Southeast Asia, Japan and Korea, which puts the second largest economy in the world in a better position to dictate the rules of trade in the region.
The United States is absent from both the RCEP and the successor to the Obama-led Trans-Pacific Partnership (TPP), leaving the world’s largest economy out of two trade deals covering the fastest-growing region on Earth.
RCEP could help Beijing reduce its dependence on external markets and technology, a change accelerated by a deeper rift with Washington. RCEP brings together the Association of Southeast Asian Nations (ASEAN), as well as China, Japan, South Korea, Australia and New Zealand. Over the next few years, it aims to gradually reduce tariffs in many sectors. The agreement was signed on the sidelines of the ASEAN Online Summit held as Asian leaders addressed tensions in the South China Sea and plans for economic recovery after the pandemic. India has not signed concerns about increasing its trade deficit with China, but it may join at a later time.
The deal will account for 30% of the global economy and population and reach 2.2 billion consumers. The Chinese Ministry of Finance said that the promises of the new bloc include canceling a set of tariffs, some immediately and others over 10 years, and there are no details about the products and which countries will see an immediate reduction of tariffs. “For the first time, China and Japan reached a bilateral agreement to reduce tariffs, and it reached a historic turning point,” the ministry said.