The leaders of China and another 14 countries in the Asia-Pacific region have signed one of the biggest free trade deals in history, covering 2.2 billion people and 30% of the world’s economic output.
The Regional Comprehensive Economic Partnership (RCEP) was signed over a video link on Sunday after eight years of negotiations.
Australia, Japan, New Zealand and South Korea signed the deal, alongside members of the 10-nation Association of Southeast Asian Nations (Asean), including Indonesia, Malaysia, the Philippines and Thailand.
The deal sets the terms of trade in goods and services, cross-border investment and new rules for increasingly important areas such as electronic commerce and intellectual property. The effect on the trade of finished goods between Asian nations will be particularly marked, analysts have said.
In a joint statement, the leaders of the countries said the trade deal would form a crucial part of their plans to recover from the pandemic, which has forced countries around the world to lock down their economies.
The leaders’ statement said the deal “demonstrates our strong commitment to supporting economic recovery, inclusive development, job creation and strengthening regional supply chains as well as our support for an open, inclusive, rules-based trade and investment arrangement”.
The combined GDP of the signatories was $26.2tn (£20tn) in 2019, or about 30% of global GDP. The deal will cover nearly 28% of global trade.
It would have covered another 1.4 billion people had India not pulled out of negotiations last year because of concerns it would not be able to protect domestic industry as well as its agricultural sector.
However, the statement from the signatories left the door open for India to join the trading bloc, saying it would be “welcome”.
While not offering the same level of integration as the EU or the US-Mexico-Canada Agreement, the deal has been seen as a significant step towards removing trade barriers, as well as extending the influence of China.
The Chinese premier, Li Keqiang, described the deal as “a victory of multilateralism and free trade”, according to a report on Sunday by the state-run Xinhua news agency.
Australia’s prime minister, Scott Morrison, said the deal would “open up new doors for Australian farmers, businesses and investors”.
Trade and investment flows within Asia have vastly expanded over the past decade, a trend that has accelerated amid feuding between the US and China, in which the two superpowers have imposed billions of dollars’ worth of punitive tariffs on each other’s exports.
The RCEP agreement is loose enough to stretch to fit the disparate needs of member countries as diverse as Australia, Myanmar, Singapore and Vietnam.
Unlike the CPTPP – the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – and the EU, it does not establish unified standards on labour and the environment or commit countries to open services and other vulnerable areas of their economies.
The signing of the deal comes shortly after Joe Biden won the US presidential election. Biden is expected to shift US foreign policy to take more of a lead on global issues.
Donald Trump in 2017 pulled out of the Trans-Pacific Partnership, a deal previously envisaged as a way of curbing China’s influence.
Signing of RCEP “victory of multilateralism, free trade”: Chinese premier
The signing of the Regional Comprehensive Economic Partnership (RCEP) is “a victory of multilateralism and free trade,” Chinese Premier Li Keqiang said on Sunday.
Li made the remarks as he attended the fourth RCEP Summit, held via video link.
“The signing of the RCEP is not only a monumental achievement in East Asian regional cooperation, but more important, a victory of multilateralism and free trade,” Li said.
With the largest participating population in the world, the most diverse membership and the greatest development potential, the free trade bloc will strongly advance the overall recovery process of the regional economy, inject new impetus into regional development and prosperity, and act as an important engine for driving global economic growth, Li said.
The RCEP will help realize a high-level opening-up for trade in goods and services, as well as investments, among regional countries, greatly lift the level of regional trade and investment liberalization and facilitation, and strengthen the attractiveness and competitiveness of the region, according to Li.
The RCEP was signed at a time when the COVID-19 pandemic is still raging across the globe, and the world economy is in a deep recession with contracted global trade and investment and rising protectionism and unilateralism.
“After eight years of negotiations, the signing of the RCEP shines light and hope through dark clouds under the current international situation, showing that multilateralism and free trade are the right way forward, and remain the right direction for promoting the growth of the world economy and the progress of humanity,” Li said.
The RCEP allows people to choose solidarity and cooperation when facing challenges, instead of resorting to conflict and confrontation, and to choose mutual assistance and support, rather than follow a beggar-thy-neighbor approach or sit by and do nothing, he said, adding it shows the world that opening-up and cooperation are the only way to achieve mutually beneficial outcomes.
The ASEAN countries have played an important leading role in the negotiation process of the RCEP, Li stressed, pledging to continue supporting the ASEAN centrality and advance the follow-up implementation of the RCEP.
He expressed hope that the parties involved would complete their domestic approval procedures as early as possible to allow the trade pact to take effect and benefit the enterprises and the people at an early date.
Li also called for more coordinating efforts in specific arrangements, such as tariff concessions, the standard of origin, facilitation measures and relevant rules, to ensure the smooth implementation of the trade pact.
“We should uphold openness and inclusiveness, deepen all-round and mutually beneficial cooperation, and work jointly to make RCEP a major platform in regional economic and trade cooperation to benefit people of all countries,” Li said.
Leaders of the RCEP member states spoke highly of the formal signing of the agreement, believing it stands as a historic and significant milestone. Especially in the context of the severe impact of COVID-19 on the world economy, RCEP, as the largest mega free trade agreement, will strongly promote regional prosperity and stability, bring hope to speeding up world economic recovery in the post-COVID-19 era, help foster an open world economy, and boost trade and investment liberation and facilitation.
They noted that the signing of the RCEP also means that all parties support an open, fair and win-win global trading system, support multilateralism, abandon protectionism and unilateralism, and stay committed to solidarity and cooperation in addressing challenges.
All parties stated that the RCEP would remain open to India and welcome India to join the pact as soon as possible.
After the summit, Li and leaders of other countries attended the signing ceremony of the RCEP. Chinese Commerce Minister Zhong Shan signed the agreement on behalf of China.
The RCEP includes the 10 ASEAN members, namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, and the bloc’s five FTA partners of Australia, China, Japan, New Zealand and the Republic of Korea.