Fifteen countries signed an ambitious trade agreement on Sunday (15.11.2020) that will serve to expand China’s influence in the region, and which they hope will help reverse the effects of the coronavirus pandemic.
This Regional Comprehensive Economic Partnership (RCEP) will create a gigantic free trade area among the 10 ASEAN nations (Indonesia, Thailand, Singapore, Malaysia, Philippines, Vietnam, Burma, Cambodia, Lagos and Brunei) as well as China, Japan, South Korea, Australia and New Zealand.
This is the largest trade agreement in the world in terms of Gross Domestic Product, analysts says. The agreement to reduce tariffs and open trade in services on the bloc is seen as an alternative that led China to the now deceased U.S.-powered agreement, buried by Donald Trump.
l RCEP “consolidates China’s broad regional geopolitical ambitions around the Silk Road initiative,” says Alexander Capri, a trade expert at the Business School of the National University of Singapore, in reference to the infrastructure project that aims to expand China’s influence on the world.
After eight years of negotiations, the agreement was signed at the end of the ASEAN-integrated Summit of Southeast Asian countries, which was held through videoconference due to the pandemic.
Many of the signatory countries suffer significant regrowths from the coronavirus and hope that the RCEP will allow them to mitigate the devastating costs of a disease that has undermined their economies.
Indonesia recently fell into its first recession in two decades as the Philippine economy contracted 11.5% year-on-year in the last quarter.
India came out of the agreement last year because of concern about China’s entry of cheap goods into its market, although it may subsequently accede if it so decides.
