Regional Comprehensive Economic Partnership (RCEP) is a free-trade agreement signed by 15 countries that account for over 30% global population and about 30% of global GDP. It was signed on 15 November 2020 at the virtual ASEAN Summit hosted by Vietnam.
The trade pact was first conceived in 2011 ASEAN Summit that took place in Bali, it was not until 2012 ASEAN Summit in Cambodia that formal negotiations were launched to bring it live. The agreement has been signed by 10 ASEAN states and five of their FTA partners.
Member states include
RCEP: A mistake or well-versed ‘trade pact’
Amid global outrage over COVID-19 pandemic and a series of issues with China, the agreement is being perceived as a serious strategic mistake by Australia and South Korea. Analysts have raised question over Australia’s stance of China. Since, asking for a enquiry on the origin of COVID-19, Australia and China have landed into a ‘dirty’ trade war with both nations banning passage ways for goods. For South Korea, the quite signing of this pact would mean ignorance of China’s activities in South China Sea and separating the narrative from issues between neighbours.
Why India did not sign RCEP
India had in November 2019, rejected the proposal to join RCEP, the biggest free-trade deal in the world. New Delhi said there were significant unresolved issues keeping it away from the deal. However, the door for India remains open for a late entry. Along with India, US has also distanced itself from the pact, raising concerns for other member nations and the overall success of RCEP.
India’s exit from the eight-year-long negotiations came as the first fall for RCEP and scope for further negotiations reduced after tensions rose between China and India over skirmishes in Ladakh region. The RCEP bloc is dominated by China and more countries are expected to join it in coming years as China increases its trade partners. Some experts have also termed it as ‘a big gun for Chinese foreign policy’ and ‘China’s trade agreement’.
Several Indian officials have time and again opposed Chinese dominance and state that their country will only join when the situation is being upheld to international standards without any interference or influence from a single nation.
Main issues keeping India away from RCEP
How will RCEP affect US economy
Since the start of 20th century, the world has stayed dependent on United States for a number of specialized goods and services. RCEP aims to end this dominance by giving the power into the hands of Asian and partner countries. If the trade deal comes into effect, it could strongly damage US’ export of goods and services, severely damaging its revenues.
To come into effect, RCEP will need to be ratified by at least 3 member nations and 2 FTA partners. The process could take years as every country would want to make the deal happen in their favour. With coronavirus pandemic in the play, decisions and situations have become more complex for everyone. Once into play, RCEP could turn tables for US and China, that have been in a trade war for months.