By James Pearson
HANOI, Nov 16 (Reuters) - Fifteen Asia-Pacific economies
signed what could become the world's largest free trade
agreement on Sunday, covering nearly a third of the global
population and about 30% of its global gross domestic product.
The Regional Comprehensive Economic Partnership (RCEP) will
progressively lower tariffs and aims to counter protectionism,
boost investment and allow freer movement of goods within the
region. HAS SIGNED?
RCEP includes China, Japan, South Korea, Australia, New
Zealand and the 10 members of the Association of South East
Asian Nations (ASEAN): Brunei, Vietnam, Laos, Cambodia,
Thailand, Myanmar, Malaysia, Singapore, Indonesia and the
Philippines.
India was involved in early discussions but opted out last
year over concerns related to cheap Chinese imports.
Member states have said there is still room for India to
join RCEP, however. Anyone can join RCEP 18 months after it
comes into force but India, as one of the original negotiating
partners, can join at any time once the deal comes into effect.
WHAT HAPPENS NEXT?
RCEP was signed at the end of a four-day ASEAN summit in
Hanoi on Sunday and must now be ratified before coming into
effect, a process that will take months to start and years to
complete.
The 510-page, twenty-chapter agreement was not made public
before Sunday's ceremony because "a number of parties would not
consent to the release of the text prior to signature", New
Zealand's foreign ministry said in a statement.
According to copies of the agreement uploaded to the foreign
ministry websites of RCEP member states on Sunday, the deal must
be ratified by at least six ASEAN countries and three non-ASEAN
signatory countries before it can come into effect.
EAST ASIAN RIVALRY
Notably, RCEP marks the first time China, Japan and South
Korea have been brought together under a single trade agreement
- a process that has been otherwise marred by historical and
diplomatic disputes.
Last year, at the height of a trade dispute between Japan
and South Korea, which had its roots in a dispute stemming from
Japan's wartime colonisation of the Korean peninsula, South
Korean officials said Japanese trade restrictions violated the
"spirit" of the RCEP.
"Japan may find significant benefits (with RCEP), as it now
has preferential access to South Korea and China, which it did
not have," said Deborah Elms of the Singapore-based Asian Trade
Centre.
WHEN WILL IT KICK IN?
RCEP provides some flexibility for less-developed members to
implement the practical and legislative changes it requires.
Cambodia and Laos, for example, have three to five years to
upgrade customs procedures.
Specifically which areas are open to tariff reductions under
RCEP is complex and changes from country to country. Some states
have listed what RCEP includes, others have listed what it does
not.
For countries which already have free trade agreements with
each other, an added benefit of RCEP is that it creates a common
set of rules of origin, which will facilitate easier movement of
goods between the 15 members.
HOW DOES RCEP COMPARE WITH CPTPP?
The idea of RCEP, hatched in 2012, was seen as a way for
China, the region's biggest importer and exporter, to counter
growing U.S. influence in the Asia-Pacific. It gained momentum
when Trump withdrew the United States from the Trans-Pacific
Partnership (TPP) in 2017.
The TPP has since been renamed the Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (CPTPP) and
it includes seven RCEP members, but not the United States.
RCEP focuses heavily on cutting tariffs and increasing
market access but is seen as less comprehensive than the CPTPP.
It also requires fewer political or economic concessions and
has less emphasis on labour rights, environmental and
intellectual property protections and dispute resolution
mechanisms.
RCEP's market size is nearly five times greater than that of
the CPTPP, with almost double its annual trade value and
combined gross domestic product.
"For an a agreement signed with countries that did not
volunteer to participate and with such incredibly diverse
membership, the quality of RCEP actually exceeds expectations,"
said Elms at the Asian Trade Centre.
"It will deliver significant economic benefits to many
firms."