Fifteen countries have formed the world’s largest trading bloc to include nearly a third of the global economy in the so-called Regional Comprehensive Economic Partnership (RCEP), which consists of 10 countries from South Asia plus South Korea, China, Japan, Australia and New Zealand.
The alliance represents an extension of China’s influence on the countries of the region, and does not include the United States, which withdrew from a trade deal competing with the Asian alliance in 2017, as President Donald Trump withdrew his country from the Trans-Pacific Partnership (TPP) after taking power, as the partnership would include 12 countries backed by Former President Barack Obama in order to counter the growing power and hegemony of China in the region.
Negotiations on the RCEP began in 2012, and the alliance agreement was signed on Sunday, hosted by Vietnam, on the sidelines of the Association of Southeast Asian Nations (Asean) meeting. Held online, state leaders hope the agreement will help recover from the coronavirus pandemic as a victory for pluralism and free trade.
The members of the alliance represent a third of the world’s population and 29% of the world’s total of household goods, and this alliance would be larger than the European Union as well as the alliance that includes Canada, Mexico and the United States.
India was among the negotiators in the formation of the alliance but withdrew last year due to concern that the low tariffs would negatively affect domestic production, but the participating countries said that the door will remain open for India to join in the future.
Many of these countries have open trade agreements with each other with certain limits, but now the alliance is expected to eliminate a set of import duties within 20 years, and allows the alliance to share intellectual property, telecommunications networks, economic services and electronic commerce in addition to professional services in Various fields, and the greatest impact will be on the new laws that will determine the origin of the product that is produced from the countries participating in the alliance officially.
But the problem is with the world’s exporting companies who will face tariffs even if they have open trade agreements because their products contain ingredients made in other countries.
For example, a product manufactured in Indonesia that contains parts from Australia will face tariffs in the free trade between the countries of the Asean Association, although the alliance will ensure that the parts are treated equally regardless of the source of the member state, which will stimulate member states to search for suppliers within the field the joint business that the alliance will secure between them.