- The Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement that is often characterised as a China-led response to the Trans-Pacific Partnership (TPP) put forward by the US.
- The pact is currently being negotiated among the 10 Asean member states as well as Australia, China, India, Japan, New Zealand and South Korea.
- It is expected to be signed in 2019 after several delays in negotiations.
- Taken together, the 16 countries negotiating the RCEP encompass about one-third of global GDP and almost half the world’s population.
- The pact aims to cover the trade in goods and services, as well as investment, intellectual property and dispute resolution.
- After US President Donald Trump withdrew the US from the TPP, the RCEP was framed as proof of Asian countries’ commitment to free trade.
- But the deal has also been criticised for setting neither environmental nor labour standards, nor tackling issues related to procurement processes and corruption.
- Concerns have also been raised about disparities between member countries, and the possibility that the pact could exacerbate global inequality.
- The deal also lacks provisions for the liberalisation of state-owned companies.
What is the difference between TPP and RCEP?
- The two deals have been shaped by the countries that led negotiations: the US and China, respectively.
- The TPP was a more ambitious plan, including market access for goods and services as well as regulations on labour, the environment, intellectual property and state-owned companies.
- The RCEP, on the other hand, is more narrowly focused on standardising tariffs across the region, as well as improving market access for services and investment.
- The latter also includes special provisions for developing economies, such as gradual tariff liberalisation and transition times.
- According to forecasts from the Asian Development Bank in 2016, the TPP had the potential to provide up to US$400 billion in global income benefits before the US withdrawal, whereas the RCEP’s contribution would amount to an estimated US$260 billion.
- The emergence of economic nationalism in the US and Trump’s trade war with China have also led to heightened interest in a deal throughout the region.
- An agreement could be signed after this year’s elections in Indonesia and India, but obstacles such as New Delhi’s reluctance to open its markets to Chinese products remain.
- As a result, India may be allowed to phase out tariffs on certain goods over a longer period to protect some of its industries.
