Fifteen countries came together to form the world’s largest trading bloc -The Regional Comprehensive Economic Partnership (RCEP). It covers nearly one third of the global economy. It consists of 10 Southeast Asian countries as well as South Korea, China, Japan, Australia and New Zealand.
This bloc reflects China’s growing influence. The United States were not included after President Trump pulled the country out of a rival pact the Trans-Pacific Partnership. The TPP involved 12 countries and garnered support from former President Barack Obama, to counteract China’s increasing power in the region.
The RCEP deal was signed on Sunday though negotiations began in 2012. Indian withdrew last year over fears of lower tariffs hurting local producers. Some countries said that the doors are open for it to join in future.
The RCEP is a huge bloc consisting of almost one third of the population worldwide. It accounts for 29% of the world’s Gross Domestic Product (GDP). This new free trade block is expected to be much bigger than both the European Union and the US-Mexico-Canadian Agreement.
Within twenty years, the RCEP will remove a range of tariffs on imports. Parts supplied from different member nations will be treated equally, tariff wise. This will give its members incentives to look for suppliers within the RCEP bloc, giving a further boost to both manufacture and trade within the region.