The Regional Comprehensive Economic Partnership (RCEP) was signed online at the 4th RCEP Leaders’ Meeting on November 15. Initiated by the Association of Southeast Asian Nations (ASEAN) in 2012, the RCEP is the largest free trade agreement worldwide, with 15 members covering 47.4% of the world’s population, about one-third of global GDP, 29.1% of world trade and 32.5% of global investment, the Global Times reports. Chinese Premier Li Keqiang hailed the signing as “a victory of multilateralism and free trade”. The agreement involves all 10 member countries of the Association of Southeast Asian Nations (ASEAN) and five of its major trading partners – China, Japan, South Korea, Australia and New Zealand. India withdrew from the negotiations in November 2019 due to domestic opposition to the pact’s market-opening requirements, but the door remains open for it to join. Leaders of the 15 countries witnessed the signing by video link. It took eight years to conclude the treaty negotiations.

Trade between China and other RCEP members amounted to USD1.06 trillion in the first three quarters of this year, accounting for about one-third of China’s total foreign trade, according to the Ministry of Commerce. The RCEP agreement contains 20 chapters covering subjects such as goods trade, investment and e-commerce. Under the deal, members will aim to cut tariffs to zero in the coming decade, according to China’s Ministry of Finance. Zhang Jianping, Director General of the China Center for Regional Economic Cooperation, said the signing of the RCEP deal will build a solid foundation for future negotiations on the China-Japan-South Korea Free Trade Agreement (FTA). Compared with other free-trade agreements, Zhang said RCEP is a new type of agreement covering new issues such as intellectual property, digital trade, finance and telecommunications, the China Daily reports.

The signing of the agreement will give a significant boost to regional economic growth, as the pact is expected to drive the recovery of member countries’ economies as well as Asia-Pacific cooperation in the post-Covid-19 era, Su Ge, Chairman of the Beijing-based China National Committee for Pacific Economic Cooperation said. The removal of tariff and non-tariff barriers alone under the RCEP would increase the Asia-Pacific region’s GDP by 2.1% and world GDP by 1.4%, according to estimates. The pact is estimated to drive up China’s GDP growth by about 0.55% and Japan’s by 0.1%, Zhang Yansheng, Chief Research Fellow at the China Center for International Economic Exchanges, told the Global Times. The RCEP will be the first trade agreement including China and Japan, allowing the latter to cancel tariffs on 56% of the farm products imported from China.

Unlike the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP or TPP) and the EU, it does not establish unified standards on labor and the environment or commit countries to open services and other vulnerable areas of their economies. Originally, the U.S. promoted the Trans-Pacific Partnership (TPP), but President Donald Trump withdrew the country from the agreement immediately after his inauguration in January 2017. It is possible that a Biden administration would rejoin the TPP pact, complicating East Asia’s foreign trade and resulting in competition between the TPP and RCEP in some areas, while cooperation and fusion of the two FTZs is also possible, the Global Times reports.

The pact will take effect once enough participating countries ratify the agreement domestically within the next two years. This overview is based on reports by The Global Times, China Daily, Shanghai Daily and The Guardian.