Editorial | RCEP provides light at end of tunnel for world in trade gloom
- Biggest free-trade pact involving 15 nations, including China, comes in the face of US isolationism and the Covid-19 pandemic aiming to reinvigorate globalisation
If the pandemic has shrouded the global economy in gloom, it also lent new urgency to talks about forming the world’s biggest free-trade deal. As a result, there is light at the end of the tunnel.
China and 14 other nations have signed the Regional Comprehensive Economic Partnership (RCEP), an Asia-Pacific trade pact covering around 30 per cent of the world’s population and its gross domestic product. Eight years after it was proposed, the pact could come into effect as early as next year after legal ratification by member countries. Ten years later it could eliminate up to 90 per cent of trade tariffs between the signatories.
Amid a setback to globalisation from American isolationism and unilateralism under President Donald Trump, the ramifications are far-reaching. It represents a boost to China’s regional influence that reflects patient advocacy. It is widely seen as a doubling down by Beijing on globalisation and free trade – a landmark commitment to an open-door policy when doubts about access have unsettled some trade and investment partners, notably the European Union.
Comparisons have been drawn with the Trans-Pacific Partnership, from which Trump withdrew the United States in 2016. The latter encompasses ambitious environmental and labour benchmarks. A number of regional countries would find them difficult right now.
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RCEP: 15 Asia-Pacific countries sign world’s largest free-trade deal
The RCEP is a less ambitious but more practical option. For a number of countries including Myanmar, Laos and Cambodia the priority is to expand basic infrastructure.
