China and 14 other Asian countries have agreed to form the world’s largest free trade bloc with nearly a third of all economic activity.
The Regional Comprehensive Economic Partnership, or RCEP, was signed virtually on Sunday on the sidelines of the annual summit of the 10-nation Association of Southeast Asian Nations (ASEAN).
“RCEP will soon be ratified by signatory countries and take effect, contributing to the post-COVID pandemic economic recovery,” said Nguyen Xuan Phuc, Prime Minister of Vietnam, which hosted the ceremony as ASEAN chair, Al Jazeera reported.
The report said RCEP will take tariffs lower between member countries. It will account for 30 per cent of the global economy, 30 per cent of the global population and reach 2.2 billion consumers, according to Vietnam.
In addition to the 10 ASEAN nations, the accord includes China, Japan, South Korea, Australia and New Zealand, but not the US.
Officials said the accord leaves the door open for India, which dropped out due to fierce domestic opposition to its market-opening requirements, to rejoin the bloc, Al Jazeera said.
The accord is a coup for China, by far the biggest market in the region with more than 1.3 billion people, allowing Beijing to cast itself as a “champion of globalisation and multilateral cooperation” and giving it greater influence over rules governing regional trade, Gareth Leather, senior Asian economist for Capital Economics, said in a report.
Al Jazeera said the US is absent from RCEP and the 11-nation Trans-Pacific Partnership (TPP) deal that US President Donald Trump pulled out of shortly after taking office. This leaves the world’s biggest economy out of two trade groups that span the fastest-growing region on earth.