ASEAN signs the Regional Comprehensive Economic Partnership (RCEP)
Leaders of the ASEAN Member States, Australia, China, Japan, the Republic of Korea, and New Zealand have signed the Regional Comprehensive Economic Partnership (RCEP) Agreement.
A summary of the RCEP can be found here.
The RCEP is ASEAN’s biggest free trade pact to date. It covers a market of 2.2 billion people with a total size of US$26.2 trillion, or 30% of global GDP. Recently published computer simulations predict the RCEP could increase trade among members by hundreds of billions, while at the same time reducing their trade with non-members.
The deal has been called a triumph of ASEAN’s middle-power diplomacy, with the ASEAN block tacking charge of negotiating the agreement, which significantly includes both of the East Asian region’s largest economies, China and Japan. As both these nations considered the other an untrustworthy architect for the project, the ASEAN countries established themselves as main driving force behind the final agreement.
As the same time, the agreement still needs to be ratified by all signatory states, and concerns have been raised over whether every signatory state’s ratification process will be painless. Countries such as Australia, China, Japan and South Korea have complicated trade relations with each other, and the enthusiasm of Malaysia and Thailand for the RCEP is arguably on the wane. Additionally, the agreement involves a large degree of internal flexibility, with signatory states offering differing tariff levels, and at different schedules. Such flexibility naturally entails greater complexity, and the eventual scope of signatories’ tariff reductions remains to be seen.
That being said, the signing of the RCEP represents the first step to creating the world’s largest trade bloc. One that does not include either the European Union, or the United States — whose exclusion has been noted as a major blow to the USA. This certainly marks an important step for the ASEAN Member States, the Asian continent, and indeed the world.
Negotiations of the RCEP started in 2013. Its virtual signing took place during the conclusion of the 4th RCEP Summit, on 15 November 2020.