History was made on Sunday when the 10 member nations of the Association of Southeast Asian Nations (ASEAN), along with five other nations in the Asia-Pacific region signed the Regional Comprehensive Economic Partnership (RCEP) at an online ceremony in Hanoi that was led by Vietnamese Prime Minister Nguyen Xuan Phuc.
The RCEP accord was signed within the framework of the virtual 37th ASEAN Summit and Related Summits hosted by Vietnam. The countries participating in the agreement include Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam.
Together, these 15 countries have formed the world’s largest trade bloc, with a market of 2.2 billion consumers, and an estimated GDP $26.2 trillion USD, accounting for approximately 30% of the global population and GDP.
Notably absent from the new trade bloc is the United States, which left the Trans Pacific Partnership agreement, which was negotiated by former U.S President, Barrack Obama and then killed by Donald Trump after he became president.
With the U.S. absent from both RCEP and TPP, many people are questioning Washington’s ability and desire to engage with Asia. Observers note that RCEP may solidify China’s position as an economic partner with RCEP member countries and put it in a better position to shape APAC trade policies.
RCEP’s goal is to progressively lower tariffs across many areas and industries with an expectation that 65% of APAC tariffs between member countries will be eliminated within five years.
The RCEP agreement was signed on the sidelines of an online ASEAN summit that was chaired by Vietnamese Prime Minister Nguyen Xuan Phuc. As well as the RCEP agreement, member countries discussed their post-COVID-19 economic recovering plans and also discussed tensions in disputed areas of the South China Sea.
The ASEAN summit was unusual in that it was held virtually, because of the coronavirus pandemic. As a major component of the RCEP ceremony, leaders of the participating countries took turns standing behind their trade ministers who, one by one, signed copies of the agreement, which they then showed triumphantly to the cameras.
|The 15 participating RCEP members who met together and signed their agreement virtually|
Vietnam Prime Minister Nguyen said, “RCEP will soon be ratified by signatory countries and take effect, contributing to the post-COVID pandemic economic recovery.”
China’s finance ministry said the new bloc’s promises include eliminating tariffs within the group, and said, and the agreement marks the first time that China, Japan and South Korea have participated in a single free trade agreement.
India was also supposed to be a member of the new regional trade group but pulled out of negotiations in 2019. Many of the countries participating in RCEP have expressed hope that India will join the trade group in the future, making it a true regional group that would then represent 3.6 billion people and be responsible for almost 40% of the world’s GDP.
Vietnamese Prime Minister Nguyen said at the signing ceremony that it has taken ASEAN and partner countries eight years to complete the RCEP negotiations and that the new agreement opens up promising trade commitments for common development and prosperity,
The Prime Minister also said that he believed that the agreement will be quickly ratified and put into effect by its member countries, contributing to positive and integrated economic recovery that will benefit all of the participating countries, especially in light of the global COVID-19 pandemic and its effect upon the countries of the Asia-Pacific region.