By Eurasia Business News – November 17, 2020
As the Western nations are weakened by lockdowns caused by COVID-19, the Asia-Pacific countries signed on November 15 an agreement creating the world’s largest free-trade zone, gathering 2.2 billion people and 30% of world economic output, demonstrating an ambitious vision for the coming decades.
Night view on Shanghai, the economic and financial center of the Popular Republic of China – Photo credit : Pixabay
A group of 15 Asia-Pacific countries, including China, Japan and Australia, signed on November 15 a multilateral agreement creating the world’s largest free-trade zone, weighing for 2.2 billion people and 30% of world economic output ($ 26.2 trillion)
The treaty was signed on the sidelines of the online summit of the Association of Southeast Asian Nations (ASEAN), held in Hanoi (Vietnam).
The “Regional Comprehensive Economic Partnership” was signed by representatives of ten ASEAN member countries (Brunei, Vietnam, Indonesia, Cambodia, Laos, Malaysia, Myanmar, Singapore, Thailand, Philippines), as well as China and the US allies such as Japan, South Korea, Australia and New Zealand.
The agreement provides for reduced trade duties, strengthen supply chains using unified rules for determining the country of origin of goods, and systematize new regulation for e-commerce. This is also for Japan the first free trade agreement with China and South Korea at the same time.
This move by Asia-Pacific nations is “another blow” to the program promoted by former US President Barack Obama. This new agreement backed by China follows the Trans-Pacific Partnership (TPP), which was signed in February 2016 by 12 countries under the United States impulse. The TPP is a trade pact that provides for the complete abolition of customs duties on goods and services in the Asia-Pacific region. The treaty covered 40% of world trade and was the largest trade agreement in the last 20 years. However, under President Donald Trump, the United States left the agreement in 2017, because, according to the new president Trump, the partnership was not beneficial for his country. This decision opened the way for an increased China’s influence in the Asia-Pacific trade.
The negotiations on the Regional Comprehensive Economic Partnership have been going on since 2013. India took part in the talks, but withdrew from the discussion last year over concerns about opening up its agricultural and manufacturing sectors to more foreign competition. The ASEAN leaders have said they are willing to expand trade with India and that the door remains open for New Delhi.
China is increasingly the economic heart of the world. One could say the country has saved the global economy twice, first with a giant investment program following the global financial crisis of 2008/2009, and now with a rapid economic recovery following the China’s successful fight against coronavirus pandemic. Therefore, instead of isolating Beijing, Asian countries prefer to maintain a dialogue in order to be able to influence the development of events in their favour. As the United States is the center of the North America economy, China has become the center of the Asia-Pacific economy. After the Belt and Road Initiative, a global infrastructure development strategy launched by the Chinese government in 2013 to invest in nearly 70 countries, Beijing has another multilateral instrument for projecting its influence.
In addition, amid protectionist times and lockdowns in Europe because of COVID-19, the signature of this “Regional Comprehensive Economic Partnership” can be described as a diplomatic and political success of China, whose the economy could recover fast after the severe coronavirus pandemic.
How will the United States react ?
The US President Barack Obama reoriented the United States to the Pacific region during his eight-year term in office. It would make sense for the then vice president and now president-elect of the United States, Joe Biden, to return to this course and embark on the path of cooperation with China, instead of confrontation chosen by the President Donald Trump.
The U.S. President-elect Joe Biden said on November 16 that the United States needed to negotiate with allies to set global trading rules to counter China’s growing influence, reported Reuters. In addition, the US President-elect declined to say whether he would join the new China-backed Asian-Pacific free-trade pact.
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