ASEAN Becomes Part of The World’s Largest Trading Bloc

The ASEAN bloc plus Australia, China, Japan, South Korea, and New Zealand signed on 15 November the agreement to create the largest trading bloc in the world, the Regional Comprehensive Economic Partnership (RCEP) Agreement.

The RCEP Agreement is a mega trading bloc that comprises a diverse mix of developed, developing, and least developed economies of the region. The newly-created trading partnership covers a market of 2.2 billion people, or nearly 30 percent of the global population, with a combined GDP of US$26.2 trillion or about 30 percent of global GDP. Based on figures from 2019, the counties part of the new pact account for almost 28 percent of global trade.

The bloc “represents an important step forward towards an ideal framework of global trade and investment rules,” the leaders of the signatories said in a joint statement.

The RCEP Agreement is set to improve market access for participants, with tariffs and quotas eliminated in over 65 percent of goods traded. The pact also makes business predictable with common rules of origin and transparent regulations. This will encourage firms to invest more in the region, including building supply chains and services, and to generate jobs, ASEAN said in a statement.

“We are confident that the RCEP Agreement would open a vast range of opportunities for businesses located in the region especially in terms of market access given the level of liberalisation for trade in goods and services and investment,” the leaders of the signatories said.

RCEP ministers also expressed “strong will to re-engage India in the RCEP Agreement.”

“The signing of the RCEP Agreement is a historic event as it underpins ASEAN’s role in leading a multilateral trade agreement of this magnitude, despite global and regional challenges and eight years of negotiations,” said ASEAN Secretary-General Dato Lim Jock Hoi.