The leaders of RCEP countries took turns standing behind their trade ministers who, one by one, signed copies of the agreement, which they then showed triumphantly to the cameras, in the online ceremony.
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Talking about the RCEP, Nguyen Xuan Phuc Prime Minister of Vietnam, who hosted the ceremony as the ASEAN summit chair, said that the pact will help in faster economic recovery post-Covid-19.
“RCEP will soon be ratified by signatory countries and take effect, contributing to the post-COVID pandemic economic recovery,” said the prime minister of Vietnam.
According to Vietnam, reaching as many as 2.2 billion consumers, the pact will account for 30 per cent of the global trade. RECP will take already low tariffs on trade between member countries still lower, over time.
RCEP “will help reduce or remove tariffs on industrial and agricultural products and set out rules for data transmission,” said Luong Hoang Thai, head of the Multilateral Trade Policy Department at Vietnam’s Ministry of Industry and Trade.
According to officials, the pact includes the 10 ASEAN countries with the new accord China, Japan, South Korea, and New Zealand, but not the United States. The accord also leaves the door open for India, which dropped out due to fierce domestic opposition to its market-opening requirements, to rejoin the bloc.
“After eight years of negotiating with blood, sweat, and tears, we have finally come to the moment where we will seal the RCEP Agreement,” Malaysia’s Trade Minister Mohamed Azmin Ali, said in a statement ahead of the ceremony.
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The deal sends a signal that RCEP countries have chosen “to open our markets instead of resorting to protectionist measures during this difficult time,” he added.
The pact is an achievement for China, as the has the biggest market compared to the member nations, giving Bejing a greater influence over rules governing regional trade, Gareth Leather, senior Asian economist for Capital Economics, said in a report.
The pact was first proposed in 2012, and was finally sealed at the end of a Southeast Asian summit as leaders push to get their pandemic-hit economies back on track.
India pulled out of the agreement last year over concerns about cheap Chinese goods entering the country and was a notable absentee during Sunday's virtual signing. It can join at a later date if it chooses. Even without India, the deal covers more than two billion people.
While the agreement touches on intellectual property but leaves environmental protections and labor rights as a part.
With China as the biggest in terms of market and population among the member nations, 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).
Even though the pact did not include the US, the 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.
While the US is absent from RCEP and the 11-nation Trans-Pacific Partnership (TPP) deal that US President Donald Trump pulled out of shortly after taking office. This leaves the world’s biggest economy out of two trade groups that span the fastest-growing region on earth.
The pact will take effect once enough participating countries ratify the agreement domestically within the next two years. ASEAN members include Cambodia, Indonesia, Laos, Myanmar, the Philippines, Thailand, Brunei, Singapore, Malaysia, and Vietnam.