In a truly momentous occasion, ministers from 15 countries in the Regional Comprehensive Economic Partnership (RCEP) signed the long-awaited trade deal at ASEAN BIS 2020 today. Vietnam hosts the ASEAN BIS 2020 summit.
What is the RCEP?
Simply put, the RCEP is a mega free trade deal between 15 countries. 10 ASEAN member nations make up the core group. The remaining five nations, China, South Korea, Japan, Australia and New Zealand, form the ASEAN plus six free trade group. These 15 nations make up 30% of the world’s population and GDP. Thus, this makes RCEP, the most extensive trade bloc.
A brief history
The RCEP trade pact was first conceived at the 2011 ASEAN Summit in Bali and officially launched at the 2012 summit in Cambodia. In 2016, US President Donald Trump announced the US withdrawal from the Trans-Pacific Partnership (TPP) which caused delays to the RCEP. Ex-Prime Minister of Malaysia, Najib Razak pushed for the RCEP after the “death” of the TPP. In November 2019, India also withdrew from the RCEP, thus furthering delays. PM of India, Narendra Modi was citing the dangers of Chinese products flooding India as the main reason for his withdrawal. The Covid pandemic this year threatened to delay the trade deal from taking place.
ASEAN leaders have collectively stated that the door remains open for India to join. Arrangements will also be available to any other external economic partners. The Negotiating Parties are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and finally, Vietnam. The three additional East Asian partners that form ASEAN Plus Three are firstly China, secondly Japan and finally South Korea. Two Oceania partners are Australia and New Zealand. India would have made it ASEAN Plus Six.
RCEP potentially includes more than 2.1 billion people or 30% of the world’s population, and a combined GDP of about $22.7 trillion. Thus, the total value of this agreement accounts for about 30 percent of world trade. Continued economic growth, particularly in China and Indonesia could see real GDP in RCEP grow to over $100 trillion by 2050.
Criticism & Applause
Western and Indian media has been critical of the RCEP. Many have dubbed it as “China” backed and expressed significant distrust at the agreement. Some have gone as far as to describe it as China’s attempts to strengthen its grip on poorer ASEAN nations. On the other hand, some trade experts have been quick to defend the deal. Alexandre Capri, International Trade Expert at NUS Business School, mentioned that the agreement is not pervasive. Its a loosely binding agreement to help open doors. Some have also pointed out the benefits of clauses within the agreement about intellectual property rights, climate change and sustainability as a step in the right direction for ASEAN and China as a whole. Above all, the sentiments amongst all the members have been positive and triumphant.
In conclusion, the pandemic has hastened the need for such an agreement. With a polarised west and a global pandemic wreaking havoc this trade deal maybe just the silver lining that 2020 has needed.