Forget NAFTA, ASEAN and the European Union. The world’s biggest trading block, an agreement that came in to force on Thursday after eights years of negotiations, comprises of 15 countries in Asia Pacific. Called the Regional Comprehensive Economic Partnership (RCEP), it is made up of 10 Southeast Asian countries, in addition to South Korea, China, Japan, Australia and New Zealand. The deal excludes the US and Europe and is the first regional multilateral trade agreement signed by China.
Why is it so significant? The deal will foster trade between partner countries and support economic recovery after a year of coronavirus pandemic. According to the BBC members of the RCEP make up nearly a third of the world’s population and account for 29 percent of global gross domestic product. The new free trade bloc will be bigger than both the US-Mexico-Canada Agreement and the European Union.
“Under the current global circumstances, the fact the RCEP has been signed after eight years of negotiations brings a ray of light and hope amid the clouds,” said Chinese Premier Li Keqiang. Longer-term, Mr Li described the agreement as “a victory of multilateralism and free trade”.
The RCEP is expected to eliminate a range of tariffs on imports within 20 years, including e-commerce, intellectual property and professional services, all of which will benefit local fashion and retail industries.
The BBC reported estimates by the Peterson Institute for International Economics show the deal could increase global national income by 186 billion pounds annually by 2030 and add 0.2 percent to the economy of its member states.
Article source: BBC; image via Pexels