Portal partners
15 countries signed the world's largest free trade agreement
Author:Mariusz Dasiewicz
15 Asian and Pacific countries signed a free trade agreement on Sunday, the initiator of which was China. The agreement was concluded at the end of the 37th Summit of the Association of Southeast Asian Nations (ASEAN), held in the capital of Vietnam Hanoi.
According to analysts, the agreement, referred to as the Regional Comprehensive Economic Partnership (RCEP), becomes the world's largest Gross Domestic Product Trade Agreement (GDP) and covers more than 2 billion people, or around 30% of the world's population. It aims to create a giant free trade zone between 10 ASEAN countries – Indonesia, Thailand, Singapore, Malaysia, Philippines, Vietnam, Burma, Cambodia, Laos and Brunei – with China, Japan, South Korea, Australia and New Zealand.
"I am glad that after eight years of complicated negotiations we can officially conclude them today by signing a deal," said Vietnam's Prime Minister Nguyen Xuan Phuc, whose country holds a rotating Presidency in ASEAN.
"The conclusion of negotiations on the largest free trade agreement in the world will be a strong signal confirming ASEAN's leading role in supporting the multilateral trading system. A new trade structure is being created in the region to facilitate sustainable trade, reviving supply chains, disrupted by the coronavirus pandemic and helping to rebalance after the crisis ends," Phuc explained.
The agreement, the idea of which dates back to 2012, by experts is seen as a Chinese response to the currently halted trade negotiations with the US. Its strength may be even greater if India joins it, for which the "open door" is left. The Delhi government had previously withdrawn from negotiations due to internal opposition to market opening requirements.
"Sygnatary contracts produce 30% of global GDP, so it will be an important step in liberalising trade and investment in the region," quoted AFP by Radjid Biswas, chief economist for Asia and the Pacific in IHS Markit, an American-British information provider based in London.
"The agreement is very beneficial to China, by far the largest market in the region, with more than 1.3 billion people. It allows Beijing to become a champion of globalisation and multilateral cooperation and gives it greater influence on the principles governing regional trade," said Senior Economist for Asia in Capital Economics for AP Gareth Leather.
AP notes that the next step will now belong to the United States. According to the U.S. agency, the participants of the agreement will watch closely how U.S. trade policy and related issues will evolve after Joe Biden assumes the office of President of the United States.
According to Biden specialists, he will press hard to re-join the trans-pacific trade pact or undo many U.S. trade sanctions imposed on China by the administration of the current White House host Donald Trump. "Taking into account concerns about China's growing influence, Biden is likely to seek a much greater commitment in Southeast Asia to protect US interests," the AP stresses.
Experts note that the agreement has powerful symbolic consequences, showing that almost four years after Trump started the "First America" policy, consisting in concluding trade agreements with individual countries, Asia remains committed to multinational efforts for freer trade, which are seen as a formula for future prosperity.
Source: PAP
