15 Asia-Pacific Countries Sign Major Trade Pact
After years of tricky negotiations 15 countries including China signed a major trade deal, creating a regional bloc that covers around a third of global economic output and extends Beijing’s influence. This is posing an early challenge to President-elect Joe Biden as he is formulating his administration’s trade policies.
The trade deal is called the Regional Comprehensive Economic Partnership (RCEP) and covers a third of the global economic output. The bloc includes many of the largest economies in the Asia-Pacific region. Apart from China, it includes Japan, South Korea, Australia, New Zealand and 10 Southeast Asian nations.
The pact will result in a more unified trading system which will minimize trading costs in the area. Therefore, it is expected to boost the global economy and help the countries better fight the economic hit from the pandemic.
The United States are not part of the deal even though they have the world’s largest economy. They were part of another deal called the TPP (Trans-Pacific Partnership) which didn’t include Beijing and was aimed in part at countering China’s growing clout. The United States pulled out of this multilateral trade pact under the Trump administration, increasing the pressure on Biden to deepen U.S. trade engagement in the Asia-Pacific region. He commented that he wants to rally allies in order to create a more forceful policy to confront China before signing the deal.
After several years of growing trade tensions, particularly between the U.S. and China which raised questions about the future of globalisation, a ceremony was held online where the 15 Nations representatives signed the pact.
Chinese Premier Li Keqiang said that the signing showed that multilateralism and free trade “still represent the right direction of the world economy and mankind.”
The negotiation of the deal took 8 years and the challenge was mainly to balance the interests of countries at varying stages of development. India for example withdrew from the deal last year because they were concerned that the deal would lead to a flood of imports but even without India the population of the countries which are part of the deal equals roughly a third of humanity.