THE BIRTH OF A MEGA FREE TRADE PACT : THE REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP(RECEP)
During a virtual summit was created on Sunday November 15, a mega trade bloc, the Regional Comprehensive Economic Partnership (RCEP) including the 10 ASEAN member states, China, Japan, South Korea, Australia, and New Zealand. The 14000 page agreement contains 20 chapters, dealing with tariffs on trade among member countries, including removing barriers for investment and travel. The RCEP is the world’s largest trade agreement, with a combined population of 2.27 billion, $26 trillion in GDP, and $5.2 trillion in exports. The agreement could boost exports among member countries by 10.4% by 2025, investments by 2.6ù, and GDP by 1.8%.
The first steps that will be implemented by the agreement consist of removing tariffs on 90 percent of merchandise immediately after its implementation, and zero tariffs in 10 years, adopting a “negative list” for investments in manufacturing, agriculture and several other sectors, including arrangements for visas and money transfers.
The RCEP, as an integrator of regional economic and trade rules, will be a recipe allowing the countries at different development stages to engage in a trade deal and trade liberalisation for its diverse groups of its members but also it will become the platform to pursue more bilateral trade deals and resolve trade and other disputes.
Because of the very diverse political systems of its members, the implementation of the agreement will also face challenges and risks not only from internal disputes between its members but also from US and EU meddling.
Mainstream American outlets described the signing of the Regional Comprehensive Economic Partnership (RCEP) agreement, one of the world’s largest regional free trade pacts, as a “challenge” to US trade. Biden’s administration would probably riposte through the US participation US participation in the Asia-Pacific multilateral trade mechanism, the Trans-Pacific Partnership (TPP) – renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Likely,the US and EU will exploit internal disputes between the RECEP’s members in order to disrupt the process, by meddling for example in
trade disputes between Japan and South Korea and igniting diplomatic tensions between China and Australia accused for its role in helping the US attack on Beijing.
To increase confrontation, the US and EU will try to sow the discord in some member countries and divide the 15 members at the same time.
Even before Donald Trump assumed office, the US was trying to contain the rise of China by initiating negotiations for the TPP, which was widely viewed as a strategy to isolate China. Although the Trump administration withdrew from the TPP, it has continued by stirring up tensions in the South China Sea.
Joe Biden, who pushed for TPP might try to disrupt the RCEP but the US would not be able to disrupt the process as the US-led multilateral trade mechanism in the Asia-Pacific does not fit many in the region, because in the framework of the RCEP each country will focus not on services provided by the US partnership but on existing industrial advantage which is more attractive to ASEAN countries
As a sign of confidence after the signing of the agreement, stock markets stock soared across the Asia-Pacific rallied on Monday as the benchmark Shanghai Composite Index gained 1.11% at market close, in Japan, the Nikkei 225 rose 2.05%, in South Korea, the Kospi also gained nearly 2% and in Australia, the S&P/ASX 200 rose 1.23%.