SINGAPORE -The world's largest trade pact was inked on Sunday (Nov 15) by ministers from 15 countries including Singapore, in a move likely to spur the region's economy as it battles its worst crisis in decades.
Building on existing free trade deals among members, the Regional Comprehensive Economic Partnership (RCEP) will broaden and deepen economic linkages across the Asia-Pacific, ease trade in goods and services, facilitate the flow of foreign investments, and enhance protections in areas such as e-commerce and intellectual property.
RCEP members account for 30 per cent of the world's economy and one-third of its population. They comprise all 10 Asean members and key partners Australia, China, Japan, South Korea and New Zealand.
At a virtual leaders' summit chaired by Vietnam's Prime Minister Nguyen Xuan Phuc on Sunday, Prime Minister Lee Hsien Loong described the signing of the pact as a "major step forward for the world, at a time when multilateralism is losing ground, and global growth is slowing".
"It signals our collective commitment to maintaining open and connected supply chains, and to promoting freer trade and closer interdependence especially in the face of Covid-19 when countries are turning inwards and are under protectionist pressures," he said.
The pact also gives its members larger stakes in each other's success and prosperity, while helping to strengthen regional peace and security, he added.
Mr Lee noted that the diversity of the participating RCEP countries shows how economies at different stages of development can come together and contribute to each other's development, as well as to the multilateral trading system.
"This diversity, and the strong links that the participating countries have with the US, Europe and the rest of the world, also reflects the inclusiveness and openness of the agreement," he added.
Mr Lee joined several leaders in expressing the hope that India will be able to sign on in future, so that "participation in the RCEP will fully reflect the emerging patterns of integration and regional cooperation in Asia".
New Delhi pulled out of talks last November after seven years of negotiations following concerns over trade imbalances. Yesterday, the RCEP leaders reiterated that the door remains open for India.
Some have raised concerns that China stands to benefit the most as the group's largest economy, but ministers noted that the RCEP gives members' businesses greater access to the vast Chinese market.
Chinese Premier Li Keqiang said the signing was a victory for multilateralism and free trade, adding: "Let people choose unity and cooperation in the face of challenges, rather than conflict and confrontation."
The pact will enter into force once six Asean countries and three partners have ratified it. RCEP leaders say they will expedite their domestic processes to ratify the pact.
It will eliminate tariffs for at least 92 per cent of goods, with additional preferential market access for exports. The flow of goods will also be faster.
More companies will be able to provide services in the region, with foreign shareholding limits raised for at least 50 sub-sectors including professional services, telecommunications and financial services.
Businesses will also find it easier to navigate and integrate into regional value chains.
Asean secretary-general Lim Jock Hoi told The Straits Times yesterday that the RCEP will ensure markets are kept open, and provide much needed certainty and stability for businesses as they cope with the Covid-19 crisis. "The signing of the RCEP agreement at this time... is a demonstration of the region's strong commitment to open, inclusive, and rules-based multilateralism and confidence of the contribution of trade to post-pandemic recovery efforts," he said.
Trade and Industry Minister Chan Chun Sing, who signed the RCEP with fellow trade ministers, added of the pact: "Beyond its economic value, it is also a statement of our strategic intent to have a shared interest in each other's prosperity and success. This bodes well for the security of the region."