Fifteen Asia-Pacific economies formed the world’s largest free trade bloc on Sunday, a China-backed deal that excludes the United States, which had left a rival Asia-Pacific grouping under President Donald Trump, Reuters reports.
The signing of the Regional Comprehensive Economic Partnership (RCEP) at a regional summit in Hanoi, is a further blow to the group pushed by former U.S. president Barack Obama, which his successor Trump exited in 2017, Reuters says.
Amid questions over Washington’s engagement in Asia, RCEP may cement China’s position more firmly as an economic partner with Southeast Asia, Japan and Korea, putting the world’s second-biggest economy in a better position to shape the region’s trade rules.
RCEP groups the 10-member Association of Southeast Asian Nations (ASEAN), China, Japan, South Korea, Australia and New Zealand.
Reuters writes that the deal marks the first time rival East Asian powers China, Japan and South Korea have been in a single free trade agreement.
The deal was signed on the sidelines of an online ASEAN summit held as Asian leaders address tensions in the South China Sea and tackle plans for a post-pandemic economic recovery in a region where U.S.-China rivalry has been rising.
It aims in coming years to progressively lower tariffs across many areas, some immediately.
RCEP will account for 30% of the global economy, 30% of the global population and reach 2.2 billion consumers, Vietnam said.
The pact will take effect once enough participating countries ratify the agreement domestically within the next two years, Indonesia’s trade minister said last week.
The agreement on the terms of the deal took place at the ASEAN summit which was held in early November.