China strengthens with signing of world's largest free trade agreement
Li Keqiang, Premier of China and Zhong Shan, Minister of Commerce
Share November 15, 2020 8:24 a.m. Share China strengthens with the signing of the largest free trade agreement in the world Alice Philipson Agence France-Presse Stéphane Delfour Agence France-Presse HANOÏ – Fifteen countries in Asia and the Pacific signed an important trade deal, promoted by China, on the occasion of the closing of a virtual summit of the ASEAN which started on Thursday.
This Regional Comprehensive Economic Partnership (RCEP) is becoming the world's largest trade agreement in terms of Gross Domestic Product, analysts say, and will affect more than two billion people.
It aims to create a gigantic free trade zone between the 10 ASEAN states (Indonesia, Thailand, Singapore, Malaysia, Philippines, Vietnam, Burma, Cambodia, Laos and Brunei), China, Japan, Korea South, Australia and New Zealand.
“I am happy that after eight years of complex negotiations, we can officially end the RCEP negotiations today,” said Vietnamese Prime Minister Nguyen Xuan Phuc, whose country holds the rotating presidency of ASEAN.
This pact, the idea of which dates back to 2012, is seen as the Chinese response to an American initiative that has now been abandoned.
It “consolidates the broader regional geopolitical ambitions of China around the” new silk roads “(” Belt and Road Initiative “in English)”, analyzes Alexander Capri, professor at the Business School of the National University of Singapore.
“It is in a way a complementary element” of this flagship instrument of Beijing's strategy of influence on the world.
“In the current global circumstances, the fact that the RCEP was signed after eight years of negotiations brings a ray of light and hope amid the clouds,” Chinese Premier Li Keqiang said after the virtual signing.
A success for Beijing
“This clearly shows that multilateralism is the right way and represents the right direction of the world economy and the progress of mankind,” he added.
The RCEP, whose members represent 30% of global GDP, will be “a major step in the liberalization of trade and investment” in the region, said Rajiv Biswas, chief economist for Asia and the Pacific of the consultant. IHS Markit.
The signing of this agreement comes in a context of severe economic crisis due to the COVID-19 epidemic for the ten members of the Association of Southeast Asian Nations (ASEAN).
They have high hopes for this agreement, which should allow them to boost their economies by making their products cheaper to export, and by making life easier for their companies through the harmonization of procedures.
But many signatories are still battling the coronavirus and are hoping RCEP will help them cushion the cost of the pandemic, which has put a huge drag on their savings.
Indonesia recently entered its first recession in two decades, while the Philippine economy contracted 11.5% year-on-year in the third quarter of 2020.
“COVID has reminded the region why trade matters and governments are more keen than ever for positive economic growth,” said Deborah Elms, executive director of the Asian Trade Center, a consultancy based in Singapore.
India, the big absent
The agreement also includes intellectual property, but excludes anything relating to the protection of workers and the environment.
India was also due to join this unprecedented trade pact, but decided last year to withdraw from it for fear of seeing cheap Chinese products invade its market. New Delhi, however, has the option of joining this agreement later.
This trade pact is also widely seen as the way for China to expand its influence in the region and set its rules, after years of passivity on the part of the United States during Donald Trump's presidency.
In January 2017, the latter had withdrawn his country from the major competing project, the Trans-Pacific Free Trade Treaty (TPP), promoted by his Democratic predecessor Barack Obama.
President-elect Joe Biden could nevertheless be more involved in the region, like Barack Obama, judge Alexander Capri.