What is the RCEP trade deal?
- The Regional Comprehensive Economic Partnership (RCEP), a mega trade bloc comprising 15 countries led by China that recently came into existence.
- The Regional Comprehensive Economic Partnership (RCEP) is a proposed agreement between the member states of the Association of Southeast Asian Nations (Asean) and its free trade agreement (FTA) partners.
- The pact aims to cover trade in goods and services, intellectual property, etc.
When was RCEP introduced?
- The Regional Comprehensive Economic Partnership was introduced during the 19th Asean meet held in November 2011.
- The RCEP negotiations were kick-started during the 21st Asean Summit in Cambodia in November 2012.
- Member states of ASEAN and their FTA partners are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, China, Japan, India, South Korea, Australia and New Zealand.
- Its aim is to lower tariffs, open up trade in services and promote investment to help emerging economies catch up with the rest of the world.
- RCEP is expected to help reduce costs and time for companies by allowing them to export a product anywhere within the bloc without meeting separate requirements for each country.
- It also touches on intellectual property, but will not cover environmental protections and labour rights.
Why does it matter?
- It mainly matters because it sets new trade rules for the region — and has China’s backing but does not include the United States.
- It solidifies China’s broader geopolitical ambitions in the region, where it has faced little competition from the US since it pulled out of a trade pact of its own, called the Trans-Pacific Partnership (TPP).
Why no India?
- India withdrew last year over concerns about cheap Chinese goods entering the country, though it can join at a later date if it chooses.
- It raised alarm about market access issues, fearing its domestic producers could be hard hit if the country was flooded with cheap Chinese goods.
- Textiles, dairy, and agriculture were flagged as three vulnerable industries.
- China and 14 other countries agreed to set up the worlds largest trading bloc.
- The Regional Comprehensive Economic Partnership, or RCEP, was signed recently on the sidelines of the annual summit of the 10-nation Association of Southeast Asian Nations.
- The RCEP signatory states will commence negotiations with India at any time after the signing of the RCEP Agreement once India submits a request in writing of its intention to accede to the RCEP Agreement to the depository of the RCEP Agreement.
- The China-backed group is expected to represent at least 30% of the global GDP and will emerge as the largest free trade agreement in the world.
Leverage for China
- The agreement means a lot for China, as it will give it access to Japanese and South Korean markets in a big way, as the three countries have not yet agreed on their FTA.
- The fact this happened, despite the pandemic, is certainly leverage for China, and shows the idea of decoupling from China is not a substantive issue in a regional sense.
Things to know about the world’s largest free trade agreement
- Supporters of the trade pact, said it will bolster pandemic-weakened economies by reducing tariffs, strengthening supply chains with common rules of origin, and codifying new e-commerce rules.
- Among the benefits of the agreement include a tariff elimination of at least 92% on traded goods among participating countries, as well as stronger provisions to address non-tariff measures, and enhancements in areas such as online consumer and personal information protection, transparency and paperless trading.
- It also includes simplified customs procedures while at least 65% of services sectors will be fully open with increased foreign shareholding limits.
- The accord will take already low tariffs on trade between member countries still lower, over time.
- The pact should help shrink costs and make life easier for companies by letting them export products anywhere within the bloc without meeting separate requirements for each country.
- The agreement touches on intellectual property, but environmental protections and labour rights are not part of the pact.
LIVE MINT, THE HINDU