China-led RCEP trade pact is signed, in challenge to US

The pact, the Regional Comprehensive Economic Partnership, or RCEP, is limited in scope but carries considerable symbolic heft

After eight years of talks, China and 14 other nations from Japan to New Zealand to Myanmar on Sunday formally signed one of the world’s largest regional free trade agreements, a pact designed by Beijing partly as a counterweight to US influence in the region.

The pact, the Regional Comprehensive Economic Partnership, or RCEP, is limited in scope. Still, it carries considerable symbolic heft. The pact covers more of humanity — 2.2 billion people — than any previous regional free trade agreement and could help further cement China’s image as the dominant economic power in its neighbourhood.

Also read: 15 Asian nations sign China-backed RCEP trade pact

It also comes after a retreat by the United States from sweeping trade pacts that reshape global relationships. Nearly four years ago, President Donald Trump pulled the United States out of the Trans-Pacific Partnership, or TPP, a broader agreement than the RCEP that was widely seen as a Washington-led response to China’s growing sway in the Asia-Pacific region. Joe Biden, the president-elect, has been noncommittal on whether he would join the TPP’s successor.

Because of the pandemic, the signing of the agreement Sunday was unusual, with separate ceremonies held in each of the 15 member countries all linked by video. Premier Li Keqiang, China’s second-highest official after President Xi Jinping, oversaw the Beijing event. In a statement, he called the pact “a victory of multilateralism and free trade.”

The RCEP encompasses the 10 countries of the Association of Southeast Asian Nations plus Australia, China, Japan, New Zealand and South Korea. The pact will most likely formalise, rather than remake, business between the countries.

The RCEP eliminates tariffs mainly for goods that already qualify for duty-free treatment under existing agreements. It allows countries to keep tariffs for imports in sectors they regard as especially important or sensitive. It has little impact on legal work, accounting or other services that cross borders, and does not venture far into intellectual property protections. The RCEP also skirts broad issues like protecting independent labour unions and the environment.

Most conspicuously, the pact does not include India, another regional giant. The New Delhi government pulled out of the negotiations in July.