On Sunday, China and 14 other countries signed the Regional Comprehensive Economic Partnership (RCEP) Agreement at the virtual-hosted ASEAN Summit, formalizing the largest free trade agreement (FTA) in history.
After an arduous eight-year negotiation period, a combination of factors such as slowing global growth, disruption to trade patterns, and US shift away from multilateralism, mobilized participating governments to push ahead with the pact despite long-standing differences. India, however, chose not to join the RCEP although the grouping has left the door open for its future entry.
The landmark agreement consists of 15 countries: 10 member states of the Association of Southeast Asian Nations (ASEAN), China, Japan, South Korea, Australia, and New Zealand.
While China is party to a number of bilateral trade agreements, this is the first time it has signed up to a regional multilateral trade pact.
The primary aim of the RCEP is to establish a comprehensive economic partnership – building on existing bilateral ASEAN agreements within the region with its FTA partners. It will be guided by a common set of rules and standards, lowered trade barriers, streamlined processes, and improved market access.
For investors, RCEP will deliver substantial new trade and investment opportunities within the participating countries – covering roughly 30 percent of the global GDP (US$26.2 trillion) and 30 percent of the world’s population to form Asia’s largest trade bloc to date.
The Chinese Premier, Li Keqiang, described the deal as “a victory of multilateralism and free trade” and stated that the new agreement is “critical to the region’s response to the COVID-19 pandemic.”