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  • Writer's pictureYizhi Xu

RCEP: The World’s Largest Free Trade Zone

After a series of arduous negotiations, the Regional Comprehensive Economic Partnership Agreement (RCEP) was signed on December 14th, 2020, ushering in a new stage of collaboration in the Asia-Pacific region. The deepening of regional economic and trade cooperation is not only an inevitable product of Sino-US wrangling but also an attempt to respond innovatively to recent international political and economic changes.

The importance and representativeness of RCEP are reflected in the figures. RCEP members include ten ASEAN (Associate of Southeast Asia Nations) members and five regional economies-Australia, China, Japan, South Korea and New Zealand. The 15 member countries' combined population reached 3.6 billion, accounting for nearly half the global total of 7.8 billion. Their total economic volume was approximately US$27 trillion, representing one third of both global GDP and world trade volume. It is worth pointing out that there are clear economic differences among the signatories, which include economies such as Singapore and Australia, whose per capita GDP is among the world’s highest, as well as those such as Laos and Cambodia, which have developed rapidly but where income levels remain low. These differences increased the difficulty of negotiations between the parties.

Tariff concessions appear to be the principal matter addressed in the agreement. Certainly, the media's first response to the agreement was to report that it would bring huge tariff concessions between countries. However, it is no secret that trade is inseparable from politics. The various anti-"free trade" behaviours, such as dumping and tariff barriers, that are often involved in trade activities are fundamentally linked to political interests and patterns.

Looking back at the history of RCEP, we can clearly see changes in geopolitics and economic and trade relations. The earliest members to advocate for the agreement were the ten ASEAN countries. For these neighbouring countries in Southeast Asia, strengthening their own economic ties was an active choice to deal with a multi-polar world. However, any regional economic and trade arrangement has boundaries. Therefore, ASEAN needed to expand its trade agreements and the scope of economic and trade cooperation to the four major economic powers of East Asia, China, Japan, and South Korea, and thereafter to Australia, New Zealand, and India. However, as China's economic and political power in the region increased, this agreement, first proposed by ASEAN, was increasingly considered to be dominated by China. One typical event occurred in November 2019, when the RCEP negotiation framework had been completed but India suddenly announced its withdrawal. This incident brought increased attention to the political struggle behind the agreement, given the long-term and subtle relationship between China and India, the sudden withdrawal of the latter from the group seemed to imply its dissatisfaction with the ‘group leader’.

Meanwhile, the signing of RCEP is also inextricably linked to the background of Sino-US wrangling from a temporal and spatial perspective. In fact, the deeper concepts of economic and trade agreements covering the service industry, intellectual property, and investment took rough shape after the Obama Administration proposed the Trans-Pacific Partnership (TPP). The TPP proposal is also widely regarded as representing the United States' desire to contain China's influence in the Asia-Pacific region through grouping. Faced with this challenge, China actively promoted the signing of RCEP, which to a large extent shows an intention to expand its influence in the region through its own efforts and gain greater space and freedom as well. Although the Trump Administration subsequently withdrew from TPP negotiations, Sino-US wrangling became ever more entrenched, Joe Biden, who served as the Vice President of the Obama Administration, has recently become the President of the United States and many people speculate that TPP will soon return to the negotiating table in a new form. During his presidential campaign, Biden constantly emphasized his hope that China could ‘play by the rules’. Needless to say, the United States still expects to lead the formulation of new world rules.

The challenges facing RCEP cannot be ignored either. ASEAN countries and China have long-standing conflicts over the South China Sea. Also, economic and trade relations between China and Australia have also sharply deteriorated recently. The various historical and territorial disputes between China and Japan, South Korea and Japan, and so on, all create possibilities for the United States to intervene. In this process, various new disputes between China and the United States may occur, or maybe a compromise can be found sometime in the future.

1 comment

1 Comment

Alfie Milnes Dobbs
Alfie Milnes Dobbs
Feb 22, 2021

Intrigued to see the outcome of RCEP in a few years time!

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