The RCEP isn’t as thorough and extensive, and doesn’t cut tariffs as cohesively as the TPP’s successor, however many analysts believe that the RCEP’s mere size makes it even more significant.
While Mainland China already has numerous bilateral trade agreements, this is the first time it has signed up to a regional multilateral trade pact.
There are a few reasons that member-ing countries want this deal. For starters, world leaders hope that the pact would help spur recovery from the COVID-19 pandemic. The negotiations had been going on for 8 years and for many, shines a ray of light and hope for participating nations. The agreement is seen by many as a victory of multilateralism, and free trade.
Initially, India had also been a part of the negotiations, however pulled out last year over big concerns that lower tariffs could potentially harm local producers. Signatories of the deal claimed that the door remains open for India to join the pact at a future date.
Members of the RCEP man up for nearly one third of the world’s population and account for almost 29% of global gross domestic product.
The newfound RCEP will be larger than both the US-Mexico-Canada agreement and the European Union.
So what will the RCEP do? It’s expected to eliminate tariff on imports within the next 20 years. It also includes provisions on intellectual property, telecommunications, financial & professional services and e-commerce.