A third of global economic output, 2.2 billion consumers: 15 states have signed the largest free trade deal in the world. The US is left out – there is a reason.
In the midst of the trade disputes with the USA, China and 14 other Asia-Pacific countries forged the largest free trade bloc in the world. The agreement was signed on Sunday at the virtual summit of the Southeast Asian Asean confederation. The new Regional Comprehensive Economic Partnership (RCEP) includes the ten Asean countries Vietnam, the Philippines, Singapore, Indonesia, Malaysia, Thailand, Myanmar, Brunei, Laos and Cambodia as well as Japan, South Korea, Australia and New Zealand.
The 15 members aim to gradually reduce tariffs in the coming years. The trade pact comprises around a third of global economic output and, with 2.2 billion consumers, around 30 percent of the world’s population, said Vietnam’s Prime Minister Nguyen Xuan Phuc as the summit host. It will soon be ratified and come into force. China, Japan and South Korea are represented together in a free trade agreement for the first time.
Trump withdrew from the agreement
The new agreement should further strengthen China’s position and influence in the world’s fastest growing region. According to experts, the second largest economy in the world could thus also accelerate the reduction in its dependence on overseas markets initiated in the wake of the trade dispute with the USA.
At the same time, the US, as the world’s largest economy, is left out of a second trade pact in the Asia-Pacific region after President Donald Trump withdrew from the TPP agreement promoted by his predecessor Barack Obama. For China, the new group, which includes many US allies, is a godsend, largely due to Trump’s withdrawal from the TPP, said Iris Pang, ING’s chief economist for Greater China.