Fifteen nations in the Asia-Pacific region have entered into the world’s largest free-trade agreement, which they hope will accelerate the recovery of their economies, ravaged by the coronavirus pandemic.
The Regional Comprehensive Economic Partnership, or RCEP, was signed on Sunday on the sidelines of the annual summit of the Association of Southeast Asian Nations (ASEAN), held via videoconference due to the pandemic.
The virtual summit was hosted by Vietnam which held the rotating chair position in the run-up to the event.
This marks the first time China enters a nonbilateral free trade agreement of this scale. Coming at a time when the U.S. is less enthusiastic about joining global trade deals and talks on a post-Brexit trade deal between the European Union and the U.K. stall, Asia looks to take the lead in shaping the new global trade architecture.
The newly signed free trade framework extends beyond trade to set common rules and standards for a range of economic activitiy.
“I am confident that RCEP will soon be ratified and come into force, further bolstering our post-pandemic economic recovery and delivering shared prosperity to the people and businesses of all participating countries,” Vietnamese Prime Minister Nguyen Xuan Phuc said after all countries signed.
RCEP was officially proposed in 2012, and the talks had dragged on since 2013. Progress was especially slow in the early years, but the discussions gained momentum after Donald Trump became the U.S. president in 2017. Amid a growing trend of protectionism, the participating governments became more motivated to promote free trade.
A notable absentee was India, which withdrew from the RCEP negotiations last year citing concerns over opening up its agricultural and manufacturing sectors to more foreign competition.
ASEAN leaders have said they still intend to expand trade with India and that the door remains open for New Delhi to rejoin the bloc.
The agreement, which the members described as “modern, comprehensive, high quality, and mutually beneficial,” includes 20 chapters of rules covering everything from trade in goods, investment and e-commerce to intellectual property and government procurement.
The deal will eliminate tariffs on a wider range of goods flowing between the participants, while ceilings on foreign shareholdings will rise in more service industries, such as professional services and telecommunications. The e-commerce chapter aims to enhance consumer protection and safeguard personal information, as well as promote acceptance of electronic signatures.