World's Biggest Trade Deal - RCEP

World's biggest trade deal. Yes, you heard it right. 15 countries in the Asia Pacific, signed the Regional Comprehensive Economic Partnership Agreement, or the RCEP. This is the world's largest trading block till date. So what impact will the RCEP have on the world? And is this really a game changer?
Well let's try to find out.
The RCEP was introduced way back in 2011 during the 19th Asean meet. The real negotiations and talks began in November 2012. That time China was pushing the deal in order to counter the US led Trans-Pacific Partnership, or the TPP trade deal. However, in 2017 US President Donald Trump withdrew US from the TPP. Since then the RCEP has been the largest trading block. Along with 10 Southeast Asian countries, the RCEP members are South Korea, China, Japan, Australia and New Zealand. All these members make up nearly one third of the world's population, plus together they account for 29% of global gross domestic product.
This partnership agreement is expected to eliminate a range of tariffs on imports within the next 10 to 20 years.
Plus it also includes provisions on intellectual property, telecommunications, financial services, and e-commerce. Also, there are predictions that, by 2030 this could increase annual income of the global economy by $190 billion.
And if you notice, this is the first trade agreement which brought China, Japan. and South Korea together.
Now the main unanswered question is, why are these asian countries interested in the RCEP? As most of nations already have Free trade agreements with each other.
Well, in a normal Free trade agreement, Businesses with global supply chains faced more tariffs. As the tariffs are applicable on products even if some of its components are from elsewhere. For example, a product made in Vietnam that contains Australian parts might face tariffs in the Asean free trade zone. Now due to RCEP, parts from any member nation would be treated equally, which might give companies in RCEP countries the tariffs reduction. So, When you manufacture a product for the RCEP market, it is easy to do business with all the 15 member countries. Plus you would need only one piece of paper. And this makes business more hassle free.
But along with the bright side, comes the dark side too.
Unlike the TPP, RCEP does not include the Agriculture sector, labor standards, and environment issues. These were the main chapters in TPP.
Apart from this, some analysts believe this deal is likely to benefit China, Japan, and South Korea more than other member states. Till now it is not much clear that how much Asean countries would benefit from this deal. But predictions are, the benefits might only be marginal for them. As some of the Asean nations are poor, and RCEP could further damage the local businesses.
This is one of the reasons why India withdrew from the talks in 2019, and has so far refused to come back. The Indian government is concerned about cheap Chinese goods which could easily enter the Indian market. As this would have hurt India's local businesses and manufacturing.
Quick Question: Is it good or bad, India not being a part of RCEP?
Write your answers in the comments below.
Apart from this some experts believe that, RCEPs goal is political rather than economical.
A common fear of RCEP is that China will dominate it with their economic power. And this fear became much stronger when India pulled out last year. Also this deal gives China an important voice in setting standards for regional trade. And in the future they might take advantage of the regions like the south china sea, by reducing the influence of United states in the region.
But the recently elected US president could also change things drastically. We mean to say, the US could re join the TPP agreement in order to reduce China's influence. But its not clear whether President Biden will take this chance or not.
Now putting the differences aside, RCEP has a combination of separate arrangements into a single deal, that brings Asia a step closer in becoming a coherent trading zone like the EU, or North America. So In the future, RCEP could attract more asian countries.
Now we would like to know your point of view about the RCEP. You can write them in the comment section below.

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