At a time when the benefits of free trade are being questioned and concerns about globalisation have risen around the world, the sealing of a pan-Asia trade agreement is a symbolic moment. The signature of the Regional Comprehensive Economic Partnership, or RCEP, marks a milestone for economic integration in the region; it spans 15 nations that together account for almost a third of the world’s gross domestic product. It is the first trade agreement to bring together China, Japan and South Korea and brings Asia a step closer to the prospect of a cohesive trading bloc.
Equally important, however, is what it signals about the diminution of American influence in the region. Donald Trump began his presidency by pulling the US out of the Trans-Pacific Partnership, a trade deal that would have strengthened American ties with 11 other regional economies. Mr Trump is now ending his presidency by witnessing China sign a deal with 14 other Asia-Pacific nations. President-elect Biden has made it clear he intends to rally American allies to push back against the growing global influence of Beijing. The signature of RCEP underlines the scale of the task.
It is important to note that despite its symbolic significance RCEP is a relatively shallow, 20th-century style trade arrangement — which concentrates on the reduction of tariffs, while largely avoiding more complex issues such as cross-border data flow, ecommerce and agriculture. It is also unclear whether RCEP’s dispute resolution mechanisms will have much effect. This matters a great deal, given China’s propensity for bullying its trade partners over political conflicts. Australia is currently suffering in this respect.