As the UK exits the EU, ASEAN countries along with Australia, China, Japan, New Zealand and South Korea have signed an agreement covering 40% of global trade
The Regional Comprehensive Economic Partnership (RCEP) potentially includes more than 3Bn people or 45% of the world’s population, with a combined GDP of about US$21.3Tn, accounting for approximately 40% of world trade.
RCEP’s formation was sped up in direct response to President Trump withdrawing USA from the regional Trans-Pacific Partnership (TPP).
The combined potential GDP of RCEP members, particularly in China, India and Indonesia, could see total GDP in RCEP grow to over US$100Tn by 2050, roughly double the project size of TPP economies (source: RCEP).
The agreement, signed on 15 November 2020, is now the largest single trade agreement and may become even bigger if still undecided India signs up.
Under the agreement, the participating countries agree to phase out tariffs over the next 20 years. RCEP is seen by many observers as preparation and recognition of China’s development from a low labour cost manufacturing base to a soon-to-be largely middle income, middle-class population consuming manufactured goods made in RCEP countries and assembled (tariff-free) and sold in China.
"Under the current global circumstances, the fact the RCEP agreement has been signed after eight years of negotiations brings a ray of light and hope amid the clouds," said Chinese Premier Li Keqiang.
Countries in RCEP and GDP in US$M