Asia-Pacific economies form free trade bloc

Gulf Today Report

Fifteen Asia-Pacific economies established a free trade bloc on Sunday, supported by China.

The Regional Comprehensive Economic Partnership (RCEP) was signed at a regional summit in Hanoi. It is the world’s largest trade bloc and doesn’t include the United States.

RCEP might solidify China’s position as an economic partner with Southeast Asia, Japan and Korea. Giving the world’s second-largest economy the upper hand in setting trade rules for the region.

The two trade groups, RCEP and Trans-Pacific Partnership (TPP) excludes the United States. 

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According to Iris Pang, ING chief economist for Greater China, RCEP has the power to help Beijing in reducing how much it relies on overseas markets and technology.

It is made up of China, South Korea, New Zealand, Japan, Australia and the 10-member Association of Southeast Asian Nations (ASEAN). It is working towards lowering tariffs across different areas in years to come.

"RCEP will soon be ratified by signatory countries and take effect, contributing to the post-COVID pandemic economic recovery," said Nguyen Xuan Phuc, prime minister of Vietnam, which hosted the ceremony as ASEAN chair.

According to Vietnam, RCEP will account for 30% of the global economy, 30% of the global population and reach 2.2 billion consumers.