World Media

World's biggest trading bloc formed after 8 years of negotiations

China, 14 Asian nations sign world's biggest trade deal, India withdrew last year

The agreement, signed virtually, creates the largest trading bloc in the world and includes about a third of global economic activity.

Asean member countries with China, Japan, South Korea, Australia, and New Zealand signed the Regional Comprehensive Economic Partnership (RCEP) during the 37th Asean Summit that concluded on Sunday.

The members of the Association of Southeast Asian Nations - a group of 10 countries that signed the agreement - said that it would eliminate tariffs and quotas on 65% of the goods that are traded in the region.

The Regional Comprehensive Economic Partnership (RCEP) agreement is expected to strengthen trade and investment in the region during the COVID-19 pandemic, Philippine Trade Secretary Ramon Lopez said Monday.

It took eight years of concerted engagement, and almost four dozen multilateral negotiations, to entertain all aspects of RCEP's mutually beneficial free-trade mechanism, and treat consensus-building as an evolving endeavor.

A Pakistani defense analyst says, "The Center of Gravity (China-centric) of a new world order is gravitating toward Asia".

It is important to state that Free Trade Agreements are only one piece of the trade puzzle, as non-tariff barriers are just as important to solve, in combination with FTAs, to achieve true Free Trade, and we can not forget it. "RCEP will provide additional avenues for tackling non-tariff barriers by promoting compliance with WTO rules and further improving cooperation and transparency", said Mr Hutchinson.

Analysts say that without India, the agreement would not have much relevance as it can not provide a big market combining India and China, the most populous countries in the world.

"That would mean more investment in the country and more jobs also for our people", Tutay said.

The 15 signatories to the deal said Sunday the pact remains open for India, which has skipped all negotiations since late past year due to concerns about opening up its market to China, and included provisions that would facilitate the Southern Asian country's smooth participation should it decide to return to the pact.

Chheang Vannarith said the pact sent a clear signal that regional economic integration in Asia remains robust and vibrant although protectionism and unilateralism are on the rise in the United States and other regions.

India was one of the original 16 participating countries of the RCEP but had withdrawn in 2019 over several reasons, of which one was Chinese goods flooding the Indian market. The agreement will also awaken domestic industries and modernize export companies for higher efficiency and global competitiveness. Another fear is that RCEP will allow China to set global standards and boost its overall standing worldwide, especially in the context of the still-born Trans-Pacific Partnership.

The birth of RCEP could also encourage firms to start up new projects within the bloc as they switch away from producing in China - an ongoing trend thanks to rising costs and the trade tensions of the past four years, noted the trade body analysis.

ASEAN members include Cambodia, Indonesia, Laos, Myanmar, the Philippines, Thailand, Brunei, Singapore, Malaysia and Vietnam.