RCEP: 15 Asian Economies sign World largest China-backed deal

On November 15, 2020, China and fourteen other countries signed a deal to set up the world largest trading bloc. The negotiations to sign the deal began in 2011. These 15 countries account to 30% of world population and 30% of global GDP. Thus, the deal is the world largest Free Trade Agreement.

Key Highlights

The deal was signed on the side lines of online ASEAN summit. The agreement will lower the tariffs further. Also, it is less comprehensive than the Trans-Pacific trade deal. This is the first time China and Japan reached a bilateral tariff reduction arrangement. Also, it is for the first time China, South Korea and Japan have come together in a single free trade agreement.

Unlike the CPTPP and the European Union Trade deal, it does not set standards on labour and environment.

India

The agreement has left the doors open for India. However, India, in 2019 opted out of the agreement mainly due to concerns of dumping manufactured goods from China. And also dumping of diary products from New Zealand and agricultural products from Australia. India also raised several concerns regarding the deal. And the deal failed to address India’s concerns.

China

The deal is also a coup for China. Being the biggest market in the region with 1.3 billion people, the deal will allow China to cast itself as a champion of multilateral cooperation and globalization. This will provide China a greater influence governing the regional trade.

Other biggest trade deals

United States-Mexico-Canada Agreement

• It is also called USMCA
• It is a reetooled version of the North American Free Trade Agreement
• It covers one-tenth of the world population

CPTPP

• It is the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership
• It was signed in 2018 in Chile.
• It was signed between Canada, Australia, Japan, Mexico, Vietnam, Singapore, Peru, New Zealand, Malaysia, Chile, Brunei.

Month: Current Affairs - November, 2020