World / 15 countries sign world's biggest free-trade pact which India left last year

Fifteen Asia-Pacific countries signed the Regional Comprehensive Economic Partnership (RCEP), considered the world's biggest free-trade deal. In addition to 10 ASEAN nations, it includes China, Japan, South Korea, Australia and New Zealand. India last year refused to join RCEP over concerns that cheap Chinese goods can enter India, however, India can join at a later date if it chooses.

Vikrant Shekhawat : Nov 15, 2020, 02:40 PM

Beijing: Fifteen countries on Sunday signed a sprawling Asian trade deal seen as a huge coup for China in extending its influence.

The Regional Comprehensive Economic Partnership (RCEP) -- which includes 10 Southeast Asian economies along with China, Japan, South Korea, New Zealand and Australia -- is the world's largest trade pact in terms of GDP, analysts say. It aims in coming years to progressively lower tariffs across many areas.

India pulled out of RCEP talks in November last year, but ASEAN leaders said the door remained open for it to join.

These 15 countries had left a rival Asia-Pacific grouping under incumbent US president Donald Trump.

The deal was signed on the sidelines of an online ASEAN summit held as Asian leaders address tensions in the South China Sea and tackle plans for a post-pandemic economic recovery in a region where US-China rivalry has been rising.

The signing of RCEP will be a further blow to the group pushed by former US president Barack Obama, which his successor Trump exited in 2017.

Furthermore, the RCEP may cement China's position more firmly as an economic partner with Southeast Asia, Japan and Korea, putting the world's second-biggest economy in a better position to shape the region's trade rules.

The United States is absent from both RCEP and the successor to the Obama-led Trans-Pacific Partnership (TPP), leaving the world's biggest economy out of two trade groups that span the fastest-growing region on earth.

RCEP could also help Beijing cut its dependence on overseas markets and technology. It will account for 30% of the global economy, 30% of the global population and reach 2.2 billion consumers, host Vietnam said on Sunday.

Despite being outside RCEP and having been in the administration that propelled the TPP, President-elect Joe Biden - Obama's vice president - is unlikely to rejoin the TPP anytime soon, analysts said, as his government will have to prioritise handling the COVID-19 outbreak at home.

The pact will take effect once enough participating countries ratify the agreement domestically within the next two years, Indonesia's trade minister said last week.