China-led RCEP free trade agreement is signed
In addition to Beijing, the 10 ASEAN nations, Japan, South Korea, Australia and New Zealand will take part. It covers 30% of the global GDP and population. The signatory countries, hit hard by the pandemic, hope that the pact will help them emerge from the crisis. India refuses to join. The trade agreement will strengthen Beijing's geopolitical weight. The problem of social dumping.
Hanoi (AsiaNews) - Fifteen nations of the Asia-Pacific region have signed the Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade agreement. The signing took place yesterday on the sidelines of the annual Association of Southeast Asian Countries (ASEAN) summit.
The pact includes the 10 ASEAN countries, plus China, Japan, South Korea, Australia and New Zealand: it covers about 30% of the global GDP and population. It now must be ratified by at least six ASEAN nations or three countries that do not belong to the Southeast Asian bloc to enter into force.
The signatory countries, hit hard by the pandemic, hope that the RCEP can help them emerge from the current crisis. The most striking case is Japan, an ally of the US. The Japanese government had always said that without India's presence, it would not have signed the agreement. In Tokyo's calculations, Delhi's participation would have offset the weight of China. Driven by the need to restart their economy, Japanese leaders have now changed their minds, agreeing to join an agreement dominated by Beijing.
The need for Indian counterweight is felt by most of the states involved in the RCEP. The press release following the signing of the pact specifies that India may join the 15 member countries at any time. Delhi refused to subscribe to the pact because it fears worsening the trade deficit with China. It also wants to protect its agricultural sector from competition from countries like Australia and New Zealand.
Analysts forecast that the RCEP will not compensate for the negative effects of the possible prolongation of the trade war between the United States and China. However, it will strengthen Beijing's geopolitical and strategic weight, which had already increased after the launch of the Belt and Road Initiative in 2013.
The Chinese can now dictate new rules on a large segment of global trade. The new pact contains references to the protection of intellectual property, and common principles on sectors such as telecommunications, financial services, public tenders and e-commerce.
However, in terms of market access, the RCEP is well below the levels set out in other free trade agreements. It will eliminate duties on 91% of products, much less than the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the heir to the Trans-Pacific Partnership (TPP) wanted by former US President Barack Obama, and the commercial treaty between Japan and the European Union.
More importantly, the RCEP says nothing about respecting environmental and labour standards. These two issues were an integral part of the TPP. The great free trade agreement was signed in 2016 by the US and 11 other countries around the Pacific. Accounting for 40% of world trade, it was seen by the Obama administration as a soft-power tool to contain Chinese expansion. At the beginning of his mandate, Trump withdrew from the pact, which entered into force without Washington in December 2018: seven of the countries that joined it are also members of the RCEP.
Observers note that the absence of regulations to protect workers and the environment damages Europe and the United States, favouring social and environmental dumping. With low wages and rights, and fewer environmental constraints, China and ASEAN states can continue to export at lower prices than their US and European competitors. This is one of the main reasons behind Washington's trade war against Beijing, and the stall in negotiations between the European Union and China in signing a comprehensive investment agreement.
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