RCEP: Regional free trade pact with profound impacts on the world

26/11/2020    23

Large RCEP economies such as China and Japan will, of course, be able to play some dominant roles within the RCEP.

After years of negotiations through several rounds, the 10 ASEAN member countries together with China, Japan, South Korea, Australia and New Zealand inked the necessary documents to create their common free trade zone called the Regional Comprehensive Economic Partnership (RCEP).

Until now, RCEP is the world's biggest free trade zone with 2.2 billion consumers, holding 30% of the world's GDP. But not only this is of great significance. The fact, too, is that China is in, while both the US and the EU are out. Just at the time when the globalization and the global liberalization of regional and world trade have been seriously threatened by US President Donald Trump's protectionism and trade conflicts as well as anti-multilateralism, the birth of RCEP is not only another decisive factor to economically and politically reshape the whole region but also to promote free trade and globalization, multi-lateral cooperation and international integration as well as to strengthen the role of the World Trade Organization (WTO).

The RCEP can also be seen as the right and timely response to the prevailing protec-tionism and anti-multilateralism in the world. In the days of the Covid-19 pandemic, RCEP's signing implies hope and encouragement that temporary setbacks such as the coronavirus pandemic cannot hinder or reverse globalization and free trade.

China is not a member of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), of which the US pulled out in 2017. But there is already the China - Asean Free Trade Agreement (CAFTA). With CAFTA and RCEP, China will position itself much better in economic and trade competition than the US and EU in the Asia-Pacific region. This would be very beneficial for China in managing all its relations with both the US and the EU. Large RCEP economies such as China and Japan will, of course, be able to play some dominant roles within the RCEP. But other participants could use RCEP to contain China and Japan within commonly accepted rules, something the US and EU have so far failed to achieve with trade disputes or sanctions or even trade wars.

RCEP creates a new constellation between regions and continents as well as between economic and trade blocks or powers in the world in favor of economies in the Asia-Pacific region. RCEP also forces all participants to basically and profoundly change or adjust their domestic and foreign policies.

The now unanswered question is only whether all RCEP members will fully hold on to their commitments.

Source: Hanoi News