Fifteen Asian nations have signed the China-backed Regional Comprehensive Economic Partnership (RCEP) trade pact to form the world’s largest free-trade bloc on Sunday.The deal is significant for China, which is looking to further strengthen its position in the Asia-Pacific region.
The signing of the RCEP at a regional summit in Hanoi is a big blow to the group pushed by former US president Barack Obama, which his successor Donald Trump exited in 2017.
The RCEP may further augment China’s position as an economic partner in Southeast Asia, Japan and Korea, putting the world’s second-biggest economy in a better position to shape the region’s trade rules.
It may be noted that the United States is absent from both RCEP and the successor to the Obama-led Trans-Pacific Partnership, leaving the world’s biggest economy out f the two trade groups that make up the fastest-growing region in the world.
China may consolidate trade position
While the signing of the trade pack could become a headache for the United States and India, which decided to pull out of the agreement last year, it is likely to strengthen China’s position significantly.
The RCEP, according to news agency Reuters, can help Beijing cut its dependence on overseas markets and technology. It is worth mentioning that the RCEP groups the 10-member Association of Southeast Asian Nations (ASEAN), China, Japan, South Korea, Australia and New Zealand.
The goal behind the trade pact is to progressively lower tariffs across many areas. The deal was signed on the sidelines of an online ASEAN summit held as Asian leaders address tensions in the South China Sea and tackle plans for a post-pandemic economic recovery in a region where US-China rivalry has been rising.
RCEP will soon be ratified by signatory countries and take effect, contributing to the post-COVID pandemic economic recovery,” said Nguyen Xuan Phuc, prime minister of Vietnam, which hosted the ceremony as ASEAN chair.
Vietnam has said that the RCEP will account for 30 per cent of the global economy, 30 per cent of the global population and reach 2.2 billion customers.
The trade pact has been termed as a historical breakthrough by China’s finance ministry and said that it will help in eliminating some tariffs within the group, including some immediately and others over a period of a decade.
It may be noted that the deal marks the first time rival East Asian powers China, Japan and South Korea have been in a single free trade agreement. The pact will take effect once enough participating countries ratify the agreement domestically within the next two years, said Indonesia’s trade minister last week.
While India has pulled out of the agreement, ASEAN leaders said that the door remains open for New Delhi to join the pact.
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