Asia-Pacific countries sign the world’s biggest trade agreement

After many years of negotiations, Asia-Pacific nations finally signed the world's biggest free-trade agreement on Sunday at a virtual summit hosted in Hanoi, news wires reported. The Regional Comprehensive Economic Partnership (RCEP) covers 2.2bn people and 29% of global economic output.

"I am very pleased that, after eight years of negotiations full of difficulties, today we end negotiations on the Regional Comprehensive Economic Partnership (RCEP) and officially sign it during the 37th ASEAN Summit," Vietnamese PM Nguyen Xuan Phuc said.

The world’s biggest trade agreement includes 10 ASEAN member states – Vietnam, Thailand, the Philippines, Laos, Cambodia, Myanmar, Malaysia, Singapore, Indonesia and Brunei – along with Australia, China, Japan, New Zealand, and South Korea.

Once in place, RCEP will reduce tariffs, set common trade rules and facilitate supply chains. The trade agreement will cover everything from trade, services, investment, e-commerce, telecommunications and copyright.

Chinese Premier Li Keqiang said the signing was a victory for the global economy. "The signing of the RCEP is not only a landmark achievement of East Asian regional cooperation but also a victory of multilateralism and free trade," Li said in a speech at the summit.

China is expected to be a major beneficiary of the RCEP agreement, with potential gains of $85bn to its GDP, according to projections from the US-based Peterson Institute for International Economics.

Jeffrey Wilson, Research Director at the Australian Strategic Policy Institute, said on Twitter on Sunday that RCEP will fundamentally remake the economic, strategic and institutional architectures of the Indo-Pacific, which will prove vital in recovering from the coronavirus pandemic. Wilson added that, despite assumptions, RCEP “is not a “China-led” agreement, but belongs to the entire region. Indeed, it will bind China into a multilateral and rules-based model for economic cooperation, constraining its preference for ad hoc bilateralism, he said.

The Australian government, meanwhile, will use the trade pact as an opportunity to strengthen relations with China, which have been tense recently, and will meet with Chinese ministers once in-person meetings resume next year, the Sun-Herald newspaper reported on Sunday before the signing. Relations between China and Australia have become increasingly strained this year, after Canberra supported US calls for an investigation into the origins of the coronavirus pandemic. In recent months, China has placed trade restrictions on Australian wine, barley and beef. Australian PM Scott Morrison said the signing was a victory for Australian farmers and jobs.

Previously, the agreement hinged on India, yet New Delhi remained reluctant to open up Indian markets as much as the deal proposed. Once India withdrew from negotiations at the end of 2019, the path forward for the trade agreement cleared. ASEAN leaders have said they still intend to expand trade with India despite the country leaving RCEP.

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