Since President Donald Trump withdrew the United States from the Trans-Pacific Partnership (TPP) agreement with 11 other countries, discussions about China-led efforts to promote Asian economic and trade integration via RCEP have come to the forefront. So what is RCEP?
RCEP stands for Regional Comprehensive Economic Partnership. The RCEP is designed to integrate economies throughout the Asian region and is a trade deal strongly supported by China, the worldâ€™s second largest economy.
RCEP negotiations began in May 2013 and was expected to conclude by the end of 2015. As with the TPP, RCEP has faced a number of challenges. Nevertheless, the goal of RCEP is to reduce trade barriers for goods and services, encourage investment, and establish dispute settlement procedures for the member countries. The degree of trade liberalization may be minimal, according to a number of reports. (See CSIS and ABC News reports) The trade deal will consist of 16 countriesâ€”10 members of theÂ Association of South East Asian Nations (Brunei Darussalam, Cambodia, Indonesia, Lao Peopleâ€™s Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam), Australia, China, India, Japan, South Korea, and New Zealand. All economies combined produce a GDP of $17 trillion and represent about 40 percent of world trade.
China is the biggest trading partner for many of the RCEP members. The United States is not a part of the RCEP, thus giving China more leverage in the area of trade in the region.
SomeÂ of the TPP members–Australia, Japan, New Zealand, and South Korea–are a part of the RCEP trade talks.Â The TPP would have created the largest trading bloc since the North American Free Trade Agreement (NAFTA) was signed. The TPPÂ was estimated to produce $28 trillion worth of trade in goods and services, an increase from NAFTAâ€™s $17 trillion trade in goods and services.
We still await conclusion of the RCEP talks. In the meantime,Â U.S. firms stand to lose by not being able to import tariff-free products from the region or having tariff-free access for their exports to the region.
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