Asia-Pacific Countries have penned the world’s largest trade agreement, a step towards further strengthening China’s influence.
According to the International News agency AFP, the Regional, Comprehensive Economic Partnership (RCEP) includes 10 Southeast Asian countries, including China, Japan, South Korea, New Zealand and Australia, which account for 30 per cent of the world’s economy.
The report stated that the agreement proposed in 2012 was finalized at the conclusion of the Southeast Asian Summit, an effort by leaders of all countries to revive the Coronavirus-effected economy.
After the signing of the agreement online, Chinese Prime Minister Li Keqiang said, “It is a fact that under current global conditions, the agreement has been signed after eight years of negotiations, which has created a ray of hope.”
“It’s clear that the partnership is moving in the right direction, and the global economy and development are moving in the right direction,” he said.
Under the agreement, tariffs will be reduced, with US non-involvement in the agreement being seen as a threat to Washington’s trade initiatives led by China in the region.
Alexander Capri, a business expert at the National University of Singapore Business School, said the RCEP clarified China’s economic intentions around the world through its Belt and Road project.
“It’s a kind of fulfilment step,” he said.
Apart from the United States, India is also out of the deal, which withdrew from the bloc last year over concerns over Chinese products.
The countries that signed the RCEP said that India is expected to rejoin because of its geographical importance.
Under the agreement, the cost of the product will be reduced and companies will be facilitated to export easily within the block as each country has different needs.
According to the report, property rights have been included in the agreement but environmental protection and workers’ rights have not been discussed.
Experts see the deal as China’s trade supremacy in the region, as the United States split from its own Trans-Pacific Partnership under Donald Trump.
He said that although US companies would also benefit from the agreement, President-elect Joe Biden would have to keep an eye on the agreement to exert influence in the region.
Rajiv Biswas, Executive Director and Asia-Pacific Chief Economist at IHS Markit, said the deal could lead the United States to reconsider its participation in the TPP.
He said it would probably not be an immediate priority for him.