Fifteen countries in the Asia Pacific region signed onto a new economic partnership to create the world’s largest economic bloc, comprising one-third of the world’s gross domestic product.
All 10 nations in the Association of Southeast Asian Nations, China, Japan, South Korea, Australia, and New Zealand signed the Regional Comprehensive Economic Partnership during a virtual summit of the ASEAN on Sunday, according to the Associated Press. Those who participated in the deal hope reduced tariffs will help participating countries dig their way out of the economic fallout caused by the coronavirus pandemic.
“I am delighted to say that after eight years of hard work, as of today, we have officially brought RCEP negotiations to a conclusion for signing,” said Vietnamese Prime Minister Nguyen Xuan Phuc, whose country hosted this year’s summit. “The conclusion of RCEP negotiation, the largest free trade agreement in the world, will send a strong message that affirms ASEAN’s leading role in supporting the multilateral trading system, creating a new trading structure in the region, enabling sustainable trade facilitation, revitalizing the supply chains disrupted by COVID-19 and assisting the post pandemic recovery.”
Absent from the accord, which affects 2.2 billion people and $26.2 trillion worth of global GDP, according to Bloomberg, was India, which backed out because of domestic opposition to requirements that would have opened its markets. The pact does allow India to enter the agreement at a later date if it chooses. The United States was not part of the partnership.
The agreement reduces tariffs more than the Trans-Pacific Partnership, which President Trump pulled the U.S. out of in January 2017. The agreement will strengthen supply chains by establishing “common rules of origin” and establish new rules regarding e-commerce.
The accord does not create the same economic cohesion as the European Union but does have significant symbolic consequence as President-elect Joe Biden redirects the U.S.’s international relationships after an era of Trump’s “America First” policies. It is unclear whether Biden will attempt to reenter the TPP after he assumes office. Regardless, analysts say the RCEP demonstrates that Trump’s policies have diminished “America’s ability to offer a counterbalance to China’s growing regional economic influence.”
A minimum of six ASEAN countries and three non-ASEAN nations must ratify the RCEP in order for the pact to enter into force, according to Chan Chun Sing, the minister of trade and industry for Singapore. Sing said Singapore intends to approve the deal “in the next few months.”
