UPDATED: Fifteen Asia-Pacific countries on Sunday signed the world’s biggest free trade deal, seen as a huge coup for China in extending its influence.
India was a notable absentee during Sunday’s virtual signing of the deal.
It did take 8 years of hard bargaining, and India only dropped out recently,” an Asia-Pacific based analyst specializing in US-China relations and South Asia tells DesPardes “Still (it’s) a major advance”, he says.
The Regional Comprehensive Economic Partnership (RCEP) includes 10 Southeast Asian economies along with China, Japan, South Korea, New Zealand and Australia, with members accounting for around 30 per cent of global gross domestic product.
The 15 Asia-Pacific countries are: China, Japan, South Korea, New Zealand and Australia plus the 10-nation Association of Southeast Asian Nations (Asean), which include Indonesia, Thailand, Singapore, Malaysia, Philippines, Vietnam, Brunei, Cambodia, Myanmar and Laos.
It “solidifies China’s broader regional geopolitical ambitions around the Belt and Road initiative”, said Alexander Capri, a trade expert at the National University of Singapore Business School, referring to Beijing’s signature investment project that envisions Chinese infrastructure and influence spanning the globe.
“It’s sort of a complementary element.”
A Pakistani defense analyst says, “The Center of Gravity (China-centric) of a new world order is gravitating toward Asia. US should be worried and same goes for Europe”.
According to him, China is making smart moves…”it has already laid out Eurasian land routes in the shape of rail links to keep Europe interested but through China”. “And by default Russians must be grinning”.
The agreement will lower tariffs and open up the services trade within the bloc –it does not include the United States and is viewed as a Chinese-led alternative to a now-defunct Washington trade initiative.
After the virtual signing of Agreement, Chinese Premier Li Keqiang said, “It clearly shows that multilateralism is the right way, and represents the right direction of the global economy and humanity’s progress.”
Though US multinationals will be able to benefit from RCEP through subsidiaries within member countries, analysts said the deal may cause President-elect Joe Biden to rethink Washington’s engagement in the region.
The analyst from Asia-Pacific says RCEP also presents a multileralist challenge to the increasingly uni- and bilateralist USA.
“Will the future President Biden reverse Donald Trump’s insularity?. Will Congress support such a reversal when Republicans still hold the majority in the Senate? Will the rest of the world simply forget the impact of the Trump years and accept US leadership as if nothing has happened? These questions are looking for answers”, he says.
The deal is also seen as a way for China to draft the rules of trade in the region, after years of US retreat under President Donald Trump which have seen Washington pull out of a trade pact of its own, the Trans-Pacific Partnership (TPP).
Signatories to the agreement said they hoped New Delhi would rejoin in the future, acknowledging its “strategic importance” to the deal which already covers more than two billion people.