“I am delighted to say that after eight years of hard work, to date, we have officially brought the RCEP negotiations to a conclusion for signature,” said the Prime Minister of the host country, Vietnam, Nguyen Xuan Phuc.
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“The conclusion of the RCEP negotiations, the world’s largest free trade agreement, will send a strong message affirming the leading role of ASEAN in supporting the multilateral trading system, creating a new trade structure in the region,” enabling sustainable trade facilitation, revitalizing the offer. chains disrupted by COVID-19 and aiding in post-pandemic recovery, ”said Phuc.
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The deal will take already low tariffs on trade between member countries even lower, over time, and is less comprehensive than an 11-country trans-Pacific trade deal that President Donald Trump withdrew shortly thereafter. taking office.
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Besides the 10 members of ASEAN, it includes China, Japan, South Korea, Australia and New Zealand, but not the United States. Officials said the deal left the door open for India, which gave up due to fierce domestic opposition to its demands to open the market, to join the bloc.
It will take time to fully assess the exact details of the agreement encompassing the tariff schedules and rules for the 15 countries involved – the tariff schedule for Japan alone is 1,334 pages long.
It should not go as far as the European Union in integrating member economies, but builds on existing free trade agreements.
The deal has powerful symbolic ramifications, showing that nearly four years after Trump launched his America First policy of forging trade deals with individual countries, Asia remains committed to the efforts of multinationals. in favor of freer trade which are seen as a formula for future prosperity.
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Ahead of the RCEP’s “special summit” meeting on Sunday, Japanese Prime Minister Yoshihide Suga said he would firmly convey his government’s support for “the expansion of a free and fair economic zone, including the possibility of a future return of India to the agreement, and hopes to gain support from other countries. “
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The deal is also a coup for China, by far the region’s largest market with more than 1.3 billion people, allowing Beijing to present itself as a “champion of globalization and multilateral cooperation ”and giving it greater influence over the rules governing trade, Gareth Leather, senior Asian economist for Capital Economics, said in a report.
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China’s state-run news agency Xinhua quoted Premier Li Keqiang as hailing the deal as a victory against protectionism, in remarks released via a video link.
“The signing of RCEP is not only a historic achievement of regional cooperation in East Asia, but also a victory for multilateralism and free trade,” Li said.
The deal is expected to help China, Japan and South Korea finally reach a trilateral free trade agreement after years of struggling to overcome their differences.
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Now that Trump’s opponent, Joe Biden, has been declared president-elect, the region is watching the development of US policy on trade and other issues.
Analysts are skeptical that Biden will do whatever he can to join the Trans-Pacific Trade Pact or overturn many of the US trade sanctions imposed on China by the Trump administration given widespread frustration with trade and human rights. Beijing man, and charges of espionage and theft of technology. .
Critics of free trade agreements say they tend to encourage companies to move manufacturing jobs overseas. So after convincing disgruntled Michigan and western Pennsylvania Rust Belt voters in the Nov. 3 election, Biden “isn’t going to waste this by going back into the TPP,” said Michael Jonathan Green of the Center for Strategic and International Studies in a webinar.
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But given concerns about China’s growing influence, Biden will likely seek a much larger engagement with Southeast Asia to protect U.S. interests, he said.
The rapidly growing and increasingly affluent Southeast Asian market of 650 million people has been hit hard by the pandemic and is urgently seeking new engines of growth.
Originally, RCEP would have included around 3.6 billion people and encompassed around one-third of world trade and world GDP. Without India, it still covers over 2 billion people and almost a third of all business and commerce.
The United States-Mexico-Canada Agreement, or CUSMA, the revamped version of the North American Free Trade Agreement under Trump, covers slightly less economic activity but less than a tenth of the world’s population. The EU and the Comprehensive and Progressive Trans-Pacific Partnership, the revised version of the deal rejected by Trump, are also smaller. The RCEP comprises six of the 11 remaining members of the CPTPP.
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India has been reluctant to expose its farmers and factories to increased foreign competition. Among other concerns, Indian dairy farmers are concerned about competition from New Zealand and Australian milk and cheese producers. Automakers fear imports from across the region. But overall, the biggest fear concerns an influx of manufactured goods from China.
Trade and investment flows in Asia have grown dramatically over the past decade, a trend that has accelerated amid feuds between the United States and China, which have imposed billions of dollars in tariffs. punitive customs on their mutual exports.
The RCEP agreement is flexible enough to accommodate the disparate needs of member countries as diverse as Myanmar, Singapore, Vietnam and Australia. Unlike the CPTPP and the EU, it does not set unified standards on labor and the environment, and does not commit countries to opening up services and other vulnerable areas of their economy.
But it sets rules for trade that will facilitate investment and other activities in the region, Jeffrey Wilson, research director at the Perth USAsia Center, said in a report for the Asia Society.
“The RCEP is therefore an indispensable platform for the post-COVID recovery of the Indo-Pacific,” he wrote.
ASEAN members are Cambodia, Indonesia, Laos, Myanmar, Philippines, Thailand, Brunei, Singapore, Malaysia and Vietnam.
© 2020 The Canadian Press