Fifteen countries in Asia and the Pacific will sign a huge free trade agreement at an online summit that began on Thursday, with the pact as a coup for China as it expanded its influence across the region.
Once signed, the Regional Economic Partnership (RCEP) will be the world’s largest trade pact in terms of GDP, according to analysts.
The pact, first proposed in 2012 and seen as a Chinese-led rival to a now-defunct US trade initiative, winds through ten Southeast Asian economies along with China, Japan, South Korea, New Zealand and Australia.
“After eight years of negotiations with blood, sweat and tears, we have finally reached the moment where we will seal the RCEP agreement on Sunday,” Malaysian Trade Minister Mohamed Azmin Ali said ahead of the virtual meeting.
Vietnam’s Prime Minister Nguyen Xuan Phuc also confirmed that the pact would be signed this week during introductory remarks at the online summit.
India had intended to sign the pact but withdrew last year due to concerns about cheap Chinese goods entering the country, although it may join at a later date if it reverses its position.
RCEP – whose members account for about 30 percent of global GDP – would be a “major positive step forward for trade and investment liberalization” in the region, said Rajiv Biswas, chief economist in Asia-Pacific at the IHS Markit Global Business Consultation.
“RCEP will be the world’s largest free trade area in terms of GDP,” he told AFP.
The expected signing of the pact comes as the ten members of the Association of Southeast Asian Nations (ASEAN) fight to alleviate the devastating costs of coronavirus, which has ravaged their economies and left many struggling with a serious public health crisis.
The pact is also seen as a mechanism for China to draw up rules for trade between Asia and the Pacific after years of US retreat under President Donald Trump.
“It really brings benefits to China’s geopolitical ambitions,” said Alexander Capri, a trade expert at the National University of Singapore Business School.
But US President-elect Joe Biden can become more actively involved in the region, Capri added in much the same way that former President Barack Obama did.
“Think of the Biden administration as a kind of continuation of the Obama administration, certainly in terms of the path to Asia,” he said.
While the region waits to see how its relationship with the United States will develop, it is grappling with several other prickly issues – including disputes over the South China Sea.
Flash-point waters – like Beijing but completely questioned by Vietnam, the Philippines, Malaysia, Brunei and Taiwan – will also be on the agenda at the summit.
But as several nations fight serious Covid-19 outbreaks, and with many promised priority access to Chinese-made vaccines, a stance against Beijing is seen as unlikely.
Instead, the focus will be on economic development in the bloc, where many of its tourism and export-dependent countries are suffering.
“The way forward is not a bed of roses,” Vietnamese President Nguyen Phu Trong said at the summit, warning that leaders are expected to work together to control infections and support suffering people.
RCEP can help relieve economic pain, said Kaewkamol Pitakdumrongkit, associate professor at the Center for Multilateralism Studies at Singapore’s Rajaratnam School of International Studies.
“In the light of Covid-19, RCEP can enable ASEAN to bounce back faster, as such a deal enables companies to diversify their supply chains and increase the resilience of regional economies,” she added.