Chino, Japan, Nov. 15, 2020—Fifteen Asian economies – that account for 1/3rd of the global economy and population and larger than the European Union — Nov. 15 signed a definitive agreement to kick-start a China-lead free-trade zone, the Regional Comprehensive Economic Partnership (RCEP) that would dwarf a smaller regional FTA, the Trans-Pacific Partnership (TPP), which president Trump spurned and in which President-elect Joe Biden has expressed to join.
The signing ceremony was held online in a ceremony arranged by Vietnam, this year’s host country of the ASEAN (the Association of Southeast Asian Nations comprising 10 countries) annual meeting, the oldest Asian economic framework. India did not sign for reasons of RCEP’s adverse economic impact on the country as well as its political relations with China.
RCEP is expected to enter into force in phases from 2021, and it is set to embrace TPP, the FTA regime of 11 Asian countries including Japan but excluding South Korea and one that outgoing president Trump dropped out. Biden last week made it known that the United States would like to join TPP but since RCEP trade and other details are effectively under China’s control, Washington would have to observe such Chinese terms.
China’s growing shadows over the entire Asian region is evident in the fact that South Korea, which is not a TPP economy, was forced to sign the RCEP agreement, and that Japan also had acquiesced to Beijing’s implicit pressure to expedite the signing amid the current political vacuum in Washington.
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Insight Into the Future