What is RCEP, the world's biggest trade deal?

The Association of Southeast Asian Nations (ASEAN) members and its free trade agreement (FTA) partners are negotiating an agreement known as the Regional Comprehensive Economic Partnership (RCEP). The agreement attempts to include intellectual property, commerce in goods and services, and other topics.

When was RCEP introduced?

The 19th ASEAN summit, which took place in November 2011, saw the introduction of the Regional Comprehensive Economic Partnership. In November 2012, at the 21st ASEAN Summit in Cambodia, the RCEP discussions were launched. By November 2019, all participating nations hope to complete and sign a pact.
Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam, China, Japan, India, South Korea, Australia, and New Zealand are all ASEAN members and FTA partners.

Why is RCEP important?

The 16 nations involved in the RCEP negotiations represent about half of the world's population and a third of the global GDP, with China and India's combined GDPs accounting for more than half of that total. By 2050, the predicted $0.5 quadrillion worldwide (GDP, PPP) may be accounted for by half of the global economy thanks to the RCEP.

What is the objective of RCEP?

By integrating 16 nations' markets, the Regional Comprehensive Economic Partnership (RCEP) aspires to make it simpler for each nation's goods and services to be available throughout the region.
Trade in goods and services, investments, intellectual property, dispute resolution, e-commerce, small and medium-sized businesses, and economic cooperation are the main discussion topics during the negotiations.

China's role in RCEP

Beijing pushed RCEP in 2012 to compete with another FTA that was being developed at the time: The Trans-Pacific Partnership (TPP). China was left out of the US-led TPP. Donald Trump, the president of the United States, withdrew his nation from the TPP in 2016. Since then, China has used the RCEP as a key weapon to counteract US efforts to obstruct trade with Beijing.
Premier Li Keqiang of China declared the agreement "a success of multilateralism and free trade" when it was signed in November last year.

At the beginning of March of last year, China ratified the RCEP. Beijing added that the agreement would increase exports of Chinese goods while accelerating China's industrial reform, acting as "strong leverage" to maintain trade and foreign investment in 2022.
According to the ministry, the agreement will gradually remove duties from China's imports of paper, pineapple, and coconut milk from ASEAN nations. The RCEP will increase investment opportunities between China and other member states as it ushers in wider access for foreign investors and increases policy transparency, according to Yu Berlin, head of international economic and trade affairs at the commerce ministry, who made this statement at the end of December.
According to Chinese customs data, imports and exports between China and the other 14 RCEP members totalled 10.96 trillion yuan (US$1.72 trillion) in the first 11 months of 2021, or 31% of China's total international trade value.

Why did India decide against signing the RCEP trade deal?

India opted against joining the 16-nation Regional Comprehensive Economic Partnership (RCEP) trade deal on November 4, 2019, stating that it was not afraid to open up to global competition across sectors and had made a compelling argument for a result that would benefit all nations and all industries.
In his speech at the RCEP Summit, Prime Minister Narendra Modi said, "the present form of the RCEP agreement does not fully reflect the basic spirit and the agreed guiding principles of RCEP. It also does not satisfactorily address India's outstanding issues and concerns in such a situation."

Why was India cautious in its RCEP negotiations?

India feared that Chinese products would flood its markets and that its industries wouldn't be able to compete with China. Given that they would be unable to compete on a global level, Indian farmers were also worried.

How could India have gained from signing the RCEP?

A section of the Indian industry felt that being part of RCEP would have allowed the country to tap into a huge market. Some, like pharmaceuticals, cotton yarn and the services industry, were confident of making substantial gains.

Sweet Tips from Ally

RCEP provides Asian businesses with new access to and improved rules for growing trade and investment in the fast-growing and dynamic Indo-Pacific region. RCEP includes chapters covering trade in goods, trade in services, investment, economic and technical cooperation, and creates new rules for electronic commerce, intellectual property, government procurement, competition, and small and medium-sized enterprises. Read more about the latest news on Coffee with Ally.