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November 15th, China and 14 other Asia-Pacific countries signed the world's largest trade agreement, Regional Comprehensive Economic Partnership (RCEP). This trading bloc will cover a market of 2.2 billion people which accounts for about 30% of the population worldwide.
The 10-member Association of Southeast Asian Nations, made up of Indonesia, Thailand, Singapore, Malaysia, the Philippines, Vietnam, Brunei, Cambodia, Myanmar, and Laos, signed the mega deal with the region's top trading partners China, Japan, South Korea, Australia and New Zealand.
The RCEP agreement shows that East Asia is very much open for business and recognizes the economic benefits of deeper trade integration.
Even though, thanks to already existing bilateral or smaller multilateral trade deals among many RCEP member countries, trade tariffs are already low given existing bilateral or smaller multilateral trade deals among them, so the direct economic benefits are limited. However, this mega deal, according to the analysts, lays the foundation for deeper cooperation among member countries in the future. What is more, the diplomatic messaging of RCEP may be just as important as the economics, and will further elevate China's political and economic influence in the region.
"From a global perspective, the RCEP agreement, signals that Asia keeps pushing ahead with trade," HSBC economists said. "As such, it may reinforce a trend that's been already underway for decades: that the global centre of economic gravity keeps pushing relentlessly to the East."
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Source: www.cnbc.com
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