Beijing looks winner as big trade pact is sealedTop News | AGENCE FRANCE-PRESSE 16 Nov 2020
Fifteen Asia-Pacific countries yesterday signed the world's biggest free trade deal, seen as a huge coup for China in extending its influence.
The Regional Comprehensive Economic Partnership includes 10 southeast Asian economies along with China, Japan, South Korea, New Zealand and Australia, with members accounting for around 30 percent of global GDP.
First proposed in 2012, the deal was finally sealed at the end of a southeast Asian summit as leaders push to get their pandemic-hit economies back on track.
"Under the current global circumstances the fact the RCEP has been signed after eight years of negotiations brings a ray of light and hope amid the clouds," said Premier Li Keqiang after the virtual signing.
The agreement to lower tariffs and open up the services trade within the bloc does not include the United States and is viewed as a Chinese-led alternative to a now-defunct Washington trade initiative.
But many of the signatories are focused on battling coronavirus outbreaks and hope the new pact will help mitigate the crippling economic cost of the pandemic.
Indonesia recently tumbled into its first recession for two decades while the Philippine economy shrunk by 11.5 percent year on year in the latest quarter.
"Covid has reminded the region of why trade matters and governments are more eager than ever to have positive economic growth," said Deborah Elms, executive director of the Asian Trade Centre, a Singapore-based consultancy.
India pulled out of the agreement last year over concerns about cheap Chinese goods entering the country.
But signatories said they hope New Delhi will join in the future, acknowledging its "strategic importance" to the deal that already covers over two billion people.
The pact should help shrink costs and make life easier for companies by letting them export products anywhere within the bloc without meeting separate requirements.
The agreement touches on intellectual property, but environmental protection and labor rights are in the pact.
The deal is also seen as a way for Beijing to draft rules of trade in the region after years of US retreat under President Donald Trump which have seen Washington pull out of a trade pact of its own, the Trans-Pacific Partnership.
Although US multinationals can benefit from RCEP through subsidiaries within member countries, analysts said the deal may cause president-elect Joe Biden to rethink Washington's engagement in the region.
This could see the United States eye the potential benefits of joining the TPP's successor deal, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, according to Rajiv Biswas, APAC chief economist at IHS Markit.