What Is the Regional Comprehensive Economic Partnership (RCEP)?
The Regional Comprehensive Economic Partnership (RCEP) is a free trade agreement (FTA) that will create the world's largest trading bloc and mark a significant achievement for China as it battles the U.S. for influence and economic supremacy in the Asia-Pacific region. The 15 Asia-Pacific nations, representing nearly a third of the world's gross domestic product, signed the agreement on November 15, 2020 via tele-conference.
- RCEP will create the world's largest trading bloc, with its Asia-Pacific members accounting for nearly a third of global gross domestic product.
- China is the key member of RCEP, which will give it the upper hand in influencing the rules of trade in Asia-Pacific.
- The agreement was signed on November 15, 2020.
Backed by China, RCEP was envisaged as a way to bolster trading ties among nations across Asia-Pacific and promote trade and economic growth in the region. Initially, it includes the 10 member countries of the Association of Southeast Asian Nations (Asean) and five Asia-Pacific countries with whom Asean has existing FTAs:
- New Zealand
- South Korea
India had also planned to join the deal but pulled out in November 2019.
While not as comprehensive as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), RCEP will lower or eliminate tariffs on a broad range of goods and services and establish rules on such things as investment, competition, and intellectual property, including digital copyright. Unlike the CPTPP, RCEP does not include provisions on labor and environmental standards.
RCEP Offers a Win for China
Concerned that China was poised to write the trading rules for Asia in the 21st century, U.S. President Barack Obama led the creation of the rival Trans-Pacific Partnership (TPP), itself an enormous and even more comprehensive trade agreement than RCEP. TPP originally included 12 nations from Asia-Pacific and the Americas—but not China. However, U.S. President Donald Trump withdrew from the TPP shortly after taking office in early 2017.
The remaining members of the TPP pushed ahead and renamed the agreement the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Trade ministers from all 11 remaining nations have signed it and seven have ratified it. But Trump's withdrawal significantly diminished its impact and U.S. influence, and the conclusion of RCEP negotiations give China an edge in setting the terms of trade in the Asia-Pacific.
RCEP and CPTPP Members
While the two trade blocs were designed with competing interests in mind, seven countries in Asia-Pacific are parties to both of them:
- New Zealand
What's Next for RCEP?
With a basic agreement reached, the 15 members who remain committed to RCEP agreed in November 2019 to sign the deal sometime in 2020. India could still join at a later date. The U.S., which hasn't been deliberately excluded from RCEP, could in theory also join if it first reached a trade agreement with Asean.