The signing of the Regional Comprehensive Economic Partnership (RCEP) at a summit in Hanoi is another blow to the TPP group promoted by former US President Barack Obama, from which Trump withdrew in 2017.
Against the backdrop of questions about Washington’s commitment to Southeast Asia, RCEP could strengthen China’s position as an economic partner of Southeast Asia, Japan and Korea, putting the world’s second largest economy in a better position to shape trade rules in the region.
The United States lacks both the RCEP and the Trans-Pacific Partnership (TPP) promoted by Obama, which means that the world’s largest economy is not part of two trade groups in the world’s fastest-growing region.
In return, RCEP could help Beijing reduce its dependence on foreign markets and technology, a change accelerated by the growing rift in relations with Washington, said Iris Pang, chief economist for the China region.
RCEP brings together the 10 member states of the Association of Southeast Asian Nations (ASEAN), China, Japan, South Korea, Australia and New Zealand. The objective of the RCEP for the next years is the progressive reduction of tariffs.
The agreement was signed at an ASEAN summit organized online by Asian leaders to discuss tensions in the South China Sea and plans for a post-pandemic economic recovery in the region where US-China rivalry has grown.
“RCEP will soon be ratified by the signatory countries and will enter into force, contributing to the post-Covid-19 economic recovery,” said Nguyen Xuan Phuc, Vietnam’s prime minister, who hosted the ceremony as ASEAN president.
RCEP will account for 30% of the global economy, 30% of the global population and 2.2 billion consumers, according to Vietnam.
China’s Ministry of Finance has announced that the new bloc’s promises include the elimination of tariffs within the group, some of which immediately and others within 10 years.
There were no details on which products and which countries would benefit from the immediate reduction of tariffs.
“For the first time, China and Japan have reached a bilateral agreement to reduce tariffs, making historic progress,” according to a ministry statement, which did not provide further details.
The agreement marks the first time that rival powers in East Asia, China, Japan and South Korea are in the same free trade agreement.