Critics claim it will be dominated by China; but that is only part of the story
It took eight years of gruelling negotiations to agree on the Regional Comprehensive Economic Partnership (rcep), which was signed by 15 countries in Asia and the Pacific on November 15th. The world’s newest and biggest regional trade deal is not the deepest. It eliminates fewer tariffs than normal, and some only after two decades. Its coverage of services is patchy, as is that of agricultural goods. India is not a member. Still, when leaders met virtually to sign on the dotted line, they hailed the pact as a triumph.
RCEP began as a tidying-up exercise, joining together in one overarching compact the various trade agreements in place between the Association of South-East Asian Nations (asean) and Australia, China, Japan, New Zealand and South Korea. That limits how much trade will be newly affected. Of the $2.3trn in goods flowing between signatories in 2019, 83% passed between those that already had a trade deal.
Some trade will be newly affected, though. China had no existing deal with Japan, for instance; nor did South Korea. So rcep’s economic impact will be more than a rounding error. Peter Petri of the Peterson Institute for International Economics, a think-tank in Washington, and Michael Plummer of Johns Hopkins University estimate that Japan and South Korea will gain the most. By 2030 their real incomes are expected to be 1% higher than they would have otherwise been.