After nearly a decade of taxing negotiations, The Regional Comprehensive Economic Partnership or RCEP has been finalized. Now, multitudes of trade agreements that had previously been in place between the Association of South-East Asian Nations (ASEAN) and Australia, China, Japan, New Zealand and South Korea will now be consolidated for expediency and infrastructural security.
Arguably the largest free trade agreement in history, the passing of the new pact means countries that previously had no formal trade deals with each other like China, Japan and South Korea now have the opportunity to enjoy lower tariffs, provided agreements on regulatory standards can be hammered out in quicker fashion.
India and the United States were to be members of RCEP, but withdrew within the last 4 years due to unease with negotiations and worry over potential impacts on their nation’s labor markets.
With nationalist administrations like Narendra Modi & Donald Trump pushing their countries towards isolationist tendencies, China has stepped forward to provide more solvency in the eastern-Asian market, and as a result, capitalize on seizing the subsequent political clout and control over nearly 3 trillion dollars worth of goods that run through the signatories.
While mending the damaged Asian economies who have been daunted by unease due to the U.S.-China trade war is a major benefit of the partnership, its not the only plus. The new agreements also have the potential to improve the economies of Eastern-Asia allowing for more cooperation in the newly burgeoning industries of technology, manufacturing, agriculture, and natural resources.
However, the biggest benefit of RCEP is without question the new rules of origin definitions being consolidated by all participating nations, meaning that speed & efficiency will be the partnership’s primary aim.
Politically speaking, this partnership speaks to the solvency between ASEAN participants and China, who now have once again demonstrated that they can hammer out comprehensive trade legislation in varying political climates. Being the second major initiative passed in the last decade between the varying groups, western nations now have appeared to have been muscled out, or better yet, left behind on the international stage.
–Terrence Dorner, B1Daily