HANOI – Fifteen countries will today sign a sprawling Asian trade deal that they hope will help them bounce back from the pandemic, and which is seen as a huge coup for China in extending its influence.
The Regional Comprehensive Economic Partnership (RCEP) – which includes the 10 Asean economies, along with China, Japan, South Korea, New Zealand and Australia – will be the world’s largest trade pact in terms of gross domestic product, said analysts.
The agreement to lower tariffs and open up the services trade within the bloc does not include the US, and is viewed as a Chinese-led alternative to a now-defunct Washington trade initiative.
RCEP “solidifies China’s broader regional geopolitical ambitions around the Belt and Road Initiative”, said Alexander Capri, a trade expert at the National University of Singapore Business School, referring to Beijing’s signature investment project that envisions Chinese infrastructure and influence spanning the globe.
“It’s sort of a complementary element.”
Eight years in the making, the deal will finally be signed at the end of an Asean summit – held by video because of Covid-19.
Many of the signatories are battling severe coronavirus outbreaks, and they hope RCEP will help mitigate the crippling cost of an illness that has ravaged their economies.
Indonesia recently tumbled into its first recession in two decades, while the Philippine economy shrunk by 11.5% 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.
“RCEP can help deliver it.”
India pulled out of the agreement last year over concerns about cheap Chinese goods entering the country, and will be a notable absentee during today’s virtual signing.
It can join at a later date if it chooses.
Even without India, the deal covers 2.1 billion people, with RCEP members accounting for around 30% of global GDP.
The deal is seen as a way for China to draft the rules of trade in the region, after years of US retreat under President Donald Trump that have seen Washington pull out of a trade pact of its own, namely the Trans-Pacific Partnership.
Though US multinationals will be able to 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. – AFP, November 15, 2020
