China Leads World's Largest Free Trade Bloc With 14 Countries
India did not sign the deal due to concerns over lower tariffs that could hurt local producers
China along with 14 other countries have come together to form the world’s largest trade bloc, which will directly impact 2.2 billion people and 30 per cent of world’s economic output. The immediate reason behind the forming of the trade bloc is to recover from the ongoing coronavirus pandemic.
The trade bloc—Regional Comprehensive Economic Partnership (RCEP)—is composed of 10 Southeast Asian countries along with South Korea, Japan, New Zealand and Australia.
Talks about the RCEP began in 2012, but it ultimately materialized this year in the backdrop of the pandemic.
The online event was organized by Vietnam wherein trade ministers of all the countries signed the pact. Vietnam said the deal will help to lower trade tariffs between the participant countries, over time, and is less comprehensive than Trans-Pacific Partnership (TPP) deal that the US President Donald Trump pulled out of after taking office in 2017.
“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.
Experts say that this pact is a testament of China’s strong influence in the region.
India, one of the notable countries with the second highest population, did not sign the deal due to concerns over lower tariffs that could hurt local producers. The deal has also come at a time, when the relation between India and China are bitter sour, with the latter consolidating its presence at the LAC. However, doors for India to join the bloc will remain open in future, according to the participant countries.
According to The Hindu, a day after the deal was signed, external affairs minister S. Jaishankar without directly referring to RCEP said India in the name of openness has allowed unfair trade and manufacturing advantages. He said past trade agreements have ‘deindustrialized’ some sectors and now the Indian government has moved towards an ‘Atmanirbhar Bharat’ policy.