Asian Nations Sign RCEP

More than a dozen countries officially signed the Regional Comprehensive Economic Partnership on Nov. 15 after years of negotiations (see 2005130018), paving the way for lower trade barriers for a range of countries throughout the Asia Pacific. The deal -- signed by the 10 Association of Southeast Asian Nations member states and China, Japan, Australia, South Korea and New Zealand -- aims to become an “unprecedented mega regional trading arrangement,” the countries said in a joint statement, covering a market of about 2.2 billion people.

Along with provisions on tariffs, RCEP will cover a range of trade issues, including rules for intellectual property, e-commerce, competition and government procurement. The 15 signatories said they hope to “expedite” the ratification process to implement the deal as soon as possible. “We are confident that the RCEP Agreement would open a vast range of opportunities for businesses located in the region especially in terms of market access,” they said.

China called the agreement “a comprehensive, modern, high-quality” deal, saying in a Nov. 15 statement and guidance that the deal marks an unprecedented step toward increasing Asian trade. “RCEP members have overcome the huge difficulties caused by the [COVID-19 pandemic], fully completed market access negotiations, and completed more than 14,000 pages of legal review,” China’s Commerce Ministry said, according to an unofficial translation. “This is the most important achievement in the construction of East Asian economic integration in the past 20 years.”

Other countries also applauded the deal. Japan said RCEP will improve its market access and investment environment, according to an unofficial translation, and Australia said its farmers and businesses will benefit from more export opportunities.

The deal should serve as a reminder to the U.S. that its Asian partners are growing increasingly confident working together without it, according to a Nov. 15 Asia Society post from Wendy Cutler, a former acting deputy U.S. trade representative. And although the deal’s rules and market access commitments are expected to be “significantly weaker” than those in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, Cutler said it may lead to more Asia Pacific cooperation.

“RCEP promotes the further integration of the member economies through common rules and lower tariff rates,” Cutler said. “It solidifies bonds between trade negotiators and ministers, from Beijing to Jakarta to Wellington, which will carry over to other fora and initiatives.”

China will be the “main winner” of the RCEP, said Hung Tran, an economist and former executive managing director of the Institute of International Finance. He said Beijing has “secured a dominant position” in one of the world’s most enviable economic regions, which will allow it to “establish its preferred rules and standards” and provide “a major advantage for its companies to exploit these valuable markets,” Tran said in a Nov. 15 Atlantic Council post.

Tran also said the RCEP runs counter to the Trump administration’s unilateral trade agenda. The U.S. “sets to lose out from sitting on the sidelines, as its attempts to re-shore US manufacturing and promote Western-backed trade rules could be dented by the new trade agreement.”

Southeast Asia is expected to benefit “significantly” from RCEP, according to a Nov. 16 Brookings Institution post from trade and economics experts Peter Petri and Michael Plummer. Although both said the agreement is not as “rigorous” as CPTPP, they said RCEP will help incentivize supply chains throughout the region. They also said RCEP and CPTPP “will offset global losses from the U.S.-China trade war, although not for China and the United States.”