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Hold on, T-MEC: Asia-Pacific countries sign the world’s largest trade agreement

Asia-Pacific countries, including China, Japan and South Korea signed the world’s largest regional free trade agreement on Sunday, which covers almost a third of the population.

Senior officials from 15 countries which also include Australia, New Zealand and the 10 members of the Association of Southeast Asian Nations signed the Regional Integral Economic Association (RCEP for its acronym in English), whose negotiations spanned nearly a decade, on the last day of the 37th Summit of the Association of Southeast Asian Nations (ASEAN), hosted virtually by Vietnam.

“The completion of the negotiations is a strong message affirming ASEAN’s role in supporting the multilateral trading system,” Vietnamese Prime Minister Nguyen Xuan Phuc said before the virtual signing ceremony. The agreement will help “develop supply chains that have been disrupted due to the pandemic, as well as support economic recovery,” he said.

A minimum of six ASEAN countries, plus three non-ASEAN partners, must ratify the RCEP for it to take effectSingapore’s Minister of Commerce and Industry Chan Chun Sing told reporters after the signing. Singapore plans to approve the deal “in the next few months,” he said.

Supporters of the trade pact, which encompasses 2.2 billion people with a combined GDP of $ 26.2 trillion, said it will bolster economies weakened by the pandemic by lowering tariffs, strengthening supply chains with common rules of origin and coding. new e-commerce rules.

The benefits of the agreement include a tariff elimination of at least 92 percent of the goods traded among participating countries, as well as stricter provisions to address non-tariff measures, and improvements in areas such as protection of personal and consumer information online, transparency and electronic documentation, according to a statement issued Sunday by the Ministry of Commerce and Industry. from Singapore. Too includes simplified customs procedures, while at least 65 percent of service sectors will be fully open with higher limits on foreign participation.

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Negotiators pushed the deal across the finish line after India surprised participants late last year by abandoning the deal. Indian Prime Minister Narendra Modi said he withdrew over concerns about how the RCEP would affect the livelihoods of Indians, particularly those of the most vulnerable. However, India will be allowed to rejoin the trade pact.

“The clause allowing India to join at a later date is symbolic and shows China’s desire to build economic bridges with the region’s third-largest economy,” said Shaun Roache, chief Asia Pacific economist at S&P Global Ratings.

Malaysia recognizes the difficulties India faces, Prime Minister Muhyiddin Yassin said in a speech Sunday.

“However, we wish to express our continued support and welcome your adherence to RCEP in the future.”

Whether RCEP changes regional dynamics in China’s favor depends on the US response, some experts said. The agreement underscores how US President Donald Trump’s decision to withdraw in 2017 from a different trade pact between Asia and the Pacific, the Trans-Pacific Economic Cooperation Agreement (TPP), diminished the capacity of states. United to offer a counterweight to China’s growing regional economic influence.

That challenge will be left to US President-elect Joe Biden when he is officially named the winner of the November 3 election. It is still unclear how the Biden team will approach trade deals and whether it will attempt to re-enter the 11-nation TPP.

The nations that are party to the treaty hope it will promote economic recovery from the global pandemic.

Australian farmers and businesses will benefit from “better export opportunities” under the RCEP pact, his government said on Sunday. There are higher investment certainties for companies and earnings for Australian providers within the financial services, education, healthcare and engineering sectors, he said.

“Our trade policy is to support Australian jobs, increase export opportunities and ensure an open region with even stronger supply chains,” Prime Minister Scott Morrison said in a statement. “With one in five Australian jobs dependent on trade, the RCEP deal will be crucial as Australia and the region begin to recover from the COVID-19 pandemic.”

The trade deal will help Indonesia recover from the pandemic and possibly increase its GDP by 0.05 percent between 2021 and 2032, Trade Minister Agus Suparmanto said in a briefing. Citing a private study, he added that the RCEP could boost exports by up to 11 percent and investment by up to 22 percent five years after its ratification.

Japan is also seeking the pact to be a catalyst for its post-coronavirus economy, Japanese Trade Minister Hiroshi Kajiyama told reporters.

“Through the removal of tariffs, I think there will be a big impact on improving Japan’s exports and making the region’s supply chains more efficient,” he said. “I firmly believe that we are building free and fair economic rules by introducing new rules on free data flows and banning technology transfer lawsuits, as well as protecting intellectual property.”

The agreement will make the exports of the participating countries more competitive and create an integrated market for China and regional nations, said Chan from Singapore.

“In the last few years, there have been several ups and downs and it certainly hasn’t been an easy road,” he said. “At one point, prospects for concluding the deal were shaken by geopolitical and national concerns. We have all had to make difficult concessions to advance the negotiations. ”