15 countries sign China-led trade pact, concerns grow in US, India

mangaloretoday.com/ yahoo

Nov 15, 2020: After eight years of talks, China and 14 other nations from Japan to New Zealand to Myanmar on Sunday formally signed one of the world’s largest regional free trade agreements, a pact designed by Beijing partly as a counterweight to US influence in the region.

The pact, the Regional Comprehensive Economic Partnership, or RCEP, is limited in scope. Still, it carries considerable symbolic heft. The pact covers more of humanity €" 2.2 billion people €" than any previous regional free trade agreement and could help further cement China’s image as the dominant economic power in its neighborhood.

It also comes after a retreat by the United States from sweeping trade pacts that reshape global relationships. Nearly four years ago, President Donald Trump pulled the United States out of the Trans-Pacific Partnership, or TPP, a broader agreement than the RCEP that was widely seen as a Washington-led response to China’s growing sway in the Asia-Pacific region. Joe Biden, the president-elect, has been noncommittal on whether he would join the TPP’s successor.

Because of the pandemic, the signing of the agreement Sunday was unusual, with separate ceremonies held in each of the 15 member countries all linked by video. Each country’s trade minister took turns signing a separate copy of the pact while his or her head of state or head of government stood nearby and watched.

Simultaneously broadcast on a split screen, the different ceremonies offered a glimpse of each country’s political culture. Vietnam, the host nation for the talks this year, and South Korea and Cambodia each had one or two small desktop flags next to their ministers. At the other extreme, China’s ceremony was conducted in front of a wall of five very large, bright red Chinese flags.

Premier Li Keqiang, China’s second-highest official after President Xi Jinping, oversaw the Beijing event. In a statement released by the state news media, he called the pact, "a victory of multilateralism and free trade."

The pact will most likely formalise, rather than remake, business between the countries. The RCEP eliminates tariffs mainly for goods that already qualify for duty-free treatment under existing free trade agreements. It allows countries to keep tariffs for imports in sectors they regard as especially important or sensitive. The pact’s so-called rules of origin will set common standards for how much of a product must be produced within the region for the final product to qualify for duty-free treatment. These rules could make it simpler for companies to set up supply chains that span several different countries.

It has little impact on legal work, accounting or other services that cross borders, and does not venture far into the often-divisive issue of ensuring greater intellectual property protections. The RCEP also skirts broad issues like protecting independent labor unions and the environment and limiting government subsidies to state-owned enterprises.

Most conspicuously, the pact does not include India, another regional giant. The New Delhi government pulled out of the negotiations in July. China had rebuffed India’s demands for a more ambitious pact that would have done far more to tie together the region’s economies, including trade in services as well as trade in goods.

He Weiwen, a former Commerce Ministry official in Beijing and prominent Chinese trade policy expert, said that Sunday’s pact nonetheless represented a big step forward.

"The Regional Comprehensive Economic Partnership, due to its size, will certainly contribute to world free trade," he said.