The People’s Republic of China has entered a trade agreement with 14 other countries. The states are joining forces to form the “Regional Comprehensive Economic Partnership” (RCEP), a “regional, comprehensive economic partnership.” The result is the largest free trade area on the globe.

What is the RCEP?

In addition to China, Japan, South Korea, Australia, and New Zealand are part of the agreement, as well as the ten ASEAN countries, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam, Cambodia, Laos, Myanmar, and Brunei.

The partnership aims to lower tariffs, which will make trade between states easier and cheaper. Overall, tariffs are to decrease for almost 90 percent of the states’ goods. Corporations that manufacture parts of their products in different countries in the free trade zone will also benefit. Moreover, the agreement includes advantageous rules for 20 other areas such as telecommunications and copyrights.

What is not Covered by the RCEP Agreement?

What is not part of the agreement is agricultural products and fish nor guidelines for the protection of workers and the environment or limits to government subsidies or rules for protecting intellectual property.

This means fewer areas are covered overall than in other comparable major free trade agreements.

RCEP Represents 29% of Global Trade Volume

In terms of population, the world’s largest free trade area is rapidly emerging. More than 2.2 billion people live in the 15 states that are now joining forces under the RCEP. Together they represent 29 percent of the global trade volume, slightly less than that of the European Union (EU), whose states together make up 33 percent.

For the 15 states who have signed on, the free trade agreement is an opportunity to accelerate their economic developments. Particularly the agreement will make it much easier for states to exchange goods with one another – without being solely dependent on exporting goods to either Europe or the US, which is likely to decrease the exchange of goods.

China-Southeast Asia Trade is Set to Boom

However, even without the EU and the US, initial forecasts have trades between China and Southeast Asia alone to grow by more than $40 billion USD by 2023.

China is the deal’s big winner. The agreement is not only a significant economic success but a political one, also. As the world’s second-largest economy and largest export nation, Chinese exporters benefit from lower tariffs and more uniform rules. Moreover, the agreement reduces the US’s influence in the Pacific region, while Beijing is expanding its own claim as a regional hegemon.

The Deal Reduces Europe’s Importance for China

Another effect is the loss of importance of Europe for China, as Beijing will no longer dependent on exporting to European nations. Conversely, European companies are also at a disadvantage if they produce in Asia or sell their goods there as Europe has so far not succeeded in signing a free trade agreement with the Association of Southeast Asian Nations (ASEAN) states.

The EU has been negotiating with China for seven years. So far, however, such an agreement has failed due to Beijing’s willingness to facilitate access to the Chinese market for European companies and reduce its own state-owned companies’ dominance. For the EU, a lot depends on China’s agreement: every day, Europeans and Chinese exchange goods and services worth around one billion euros.

China PM: ‘a Victory for Multilateralism and Free Trade’

Chinese Prime Minister Li Keqiang said the deal was not only a tremendous achievement for regional integration, “but, more importantly, a victory for multilateralism and free trade.”

The US, on the other hand, is the big loser of the RCEP agreement. Four years ago, the US sought to sign an already negotiated Trans-Pacific Partnership Agreement (TPP) in which China would not have been a party. However, the protectionist policy of US President Donald Trump did not permit such an agreement. Hence, Trump terminated American participation in the deal immediately after taking office in 2017.

The remaining Pacific nations agreed in 2018 on the “Comprehensive and Progressive Agreement for a Trans-Pacific Partnership” (CPTPP). Instead of a TPP deal without China, there are now two major trade agreements in the Pacific region v and none of them include the US.

L'articolo China and Asia Pacific Nations Enter World’s Largest Trade Partnership the RCEP proviene da InsideOver.

On December 24, China’s Prime Minister Li Keqiang hosted a meeting with his Japanese counterpart Shinzo Abe and South Korea’s President Moon-Jae in Chengdu in mainland China’s Sichuan Province.

Results Of The Summit

The summit produced a document titled “Trilateral Cooperation Vision For The Next Decade.” According to the agreement, the three countries have agreed to boost trilateral cooperation, maintain long-lasting peace and security and work towards trilateral free trade based on the outcome of the RCEP (Regional Comprehensive Economic Partnership), which is currently in its formative phase.

Dealing With North Korea Was The Core Issue Of The Summit

The summit took place amid uncertainty surrounding the future of denuclearization dialogues between North Korea and the US. Both have held talks three times in Singapore in June 2018, Hanoi, Vietnam in February 2019 and the last-minute meeting between US President Donald Trump and North Korean leader Kim Jong-un in the demilitarized zone between North and South Korea at the end of June this year.

However, those meetings failed to produce concrete agreements to create a peaceful Korean Peninsula due to different interpretations over the term “denuclearization”. North Korea wants the US to lift the sanctions, while Washington wants Pyongyang to dismantle its nuclear weapons program fully before the embargoes are removed.

As the tension in the Peninsula intensifies following a series of recent missile tests carried out by Pyongyang, President Moon stated that the increasing tension would benefit nobody, including North Korea itself, adding that peace in the Korean Peninsula is the “common interest” of China, South Korea and Japan. The three countries stressed the need for closer communication to create lasting peace on the Korean Peninsula.

North Korea has announced a year-end deadline for Washington to change its approach which it calls a hostile policy and says has halted the progress of the prior denuclearization dialogues.

Abe And Moon Working To Improve Japan-South Korea Relationship

In Chengdu, Moon and Abe held an additional closed-door meeting on the sidelines of the summit. Abe asked Seoul to take steps to solve the prolonged trade dispute between Japan and South Korea. Moon hoped to foster better ties with his neighbor. Both leaders held talks for 45 minutes, longer than the scheduled 30 minutes. It was their first bilateral meeting in 15 months.

“Japan and South Korea are historically and culturally the closest neighbors, and very big, important partners on people-to-people exchanges. We’re not in a relationship that can set the two apart even when there’s some discomfort for a while,” Moon stated.

Japan and South Korea are both key US allies, but have been involved in a trade dispute and experienced tensions stemming from Seoul’s old wounds suffered during the Japanese occupation of Korea between 1910 to 1945. In July 2018, Japan restricted chemical exports needed for South Korea’s technology industry sectors, claiming that Seoul would sell those chemical elements to North Korea illegally, allowing the Hermit Kingdom produce weapons. South Korea denied the allegation.

According to President Moon, Japan’s actions were a response to South Korea’s Supreme Court verdict in 2017 ordering Japan to provide compensation to forced labor victims who suffered during its previous occupation. Japan refused to do so and threatened it would remove South Korea from Tokyo’s favored trading partners. South Korea also retaliated at the time by boycotting Japan’s products. It is a positive step forward that Moon and Abe are working to mend fences.

China Seeks Support From Two Close US Allies

During the summit, China offered support for infrastructure projects to Japan and South Korea. In a meeting with Abe, Li Keqiang said that Beijing was ready to strengthen economic cooperation with Japan.

In a separate meeting with Moon, Li expressed China’s willingness to build a railway connecting South Korea to Europe, as Yonhap News Agency reported.

Li’s statement came following the recent agreement that Washington and Beijing reached on phase one of a China-US trade deal. US-China tension has intensified in recent months, particularly after US lawmakers came out in support of Hong Kong protesters and slammed China over alleged human rights violations targeting its Muslim Uighur community in Xinjiang Province.

Conclusions On The Trilateral Summit

The summit is part of China’s effort to contribute to global diplomacy. China’s media outlet Global Times hailed Beijing’s ability to bring the quarreling neighbors South Korea and Japan together, claiming that the summit was successful.

China aims to prove its diplomatic ability to bring disputing sides together. After the US failed to calm down the disagreement involving its allies (South Korea and Japan), China has stepped in, and there is a hope that Tokyo and Seoul will settle the differences and heal the old wounds, even though nobody can predict what will happen next.

As the three nations pushed for a restart to US-North Korea dialogue, there is little optimism that the upcoming talks—if they even happen—will achieve progress unless Washington and North Korea can at least agree on the definition of denuclearization.

L'articolo Key Points From The China-Japan-South Korea Trilateral Summit proviene da InsideOver.