TOKYO, Nov. 6, 2020—If finalized over the coming weeks, it will become the world’s largest free trade area, bigger than the European Union commanding nearly 30 percent of the global economy, and China is likely to play a pivotal role in steering the zone’s policy and administration for challenging the United States and the rest of the world. The agreement is likely to force the United States to change the current bilateral trade policy and return to multilateralism.
Japanese trade minister Toshimitsu Motegi told a parliamentary session Nov. 6 morning that negotiations on the Regional Comprehensive Economic Partnership (RCEP) are in the final stage and agreement could be reached during an ASEAN leadership meeting hosted by Vietnam and scheduled on-line around Nov. 15.
If agreed at that time, signing may take place over the next few months and the zone would commence working in two years or so enabling members’ free or low-tariff transactions of goods, services and intellectual properties.
RCEP was incubated in 2012 with Japan’s initiative in framework-building and negotiations for the 16 member countries spanned over the broad Asian region. The participating countries are: Japan, China, South Korea, India, Australia, New Zealand, and ten Association of Southeast Asian Nations (ASEAN) countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam). Combined, they represent approximately 40 percent of the world economy and more than half of the global population.
Over the intervening years, the lead role has shifted to China from Japan in tandem with Beijing’s rapid economic growth and its growing influence over the Asian region and the world. To deflect China’s influence, Japan hastened the signing and entering into force in December 2018 a smaller regional FTA zone called the Trans-Pacific Partnership (TPP) 11 that groups Japan, Vietnam, Brunei, Malaysia, Singapore, Australia, New Zealand, Canada, Mexico, Peru and Chile. The TPP-11 represents 12 percent of the global economy.
RCEP will embrace the TPP-11 members if/when signed and entered into force, making it a larger economic zone than the EU’s 22 percent.
Japan, which is wedged between its multilateralism and Trump’s bilateralism, is pressured by China to promptly seal the RCEP agreement, or else Beijing would proceed with other RCEP members with the Chinese multilateralism helm, which Tokyo clearly does not want.
It’s the reason why Japan wants to seal the agreement as soon as possible, sources said. Just how hasty the Japanese are to do so is illustrated by the fact that Tokyo is going ahead despite the absence of India, which had been participating in RCEP negotiations over the past years, won’t take part in the agreement objecting to China’s rising influence on RCEP negotiation terms. So, the upcoming agreement would carry language that door is open for India to join, sources said. At the Shanghai International Import Expo, Chinese president X Jinping reiterated that Beijing is resolved to pursue multilateral trade with the world is ready to sign ‘high-standard’ FTAs, according to Xinhua News Agency.
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