THE PROCESS has been as agonising as the name is clunky. But the 15 Asian countries that on November 15th signed the Regional Comprehensive Economic Partnership (RCEP) in a virtual ceremony in Hanoi can at least congratulate themselves on breaking some records. RCEP is the world’s largest plurilateral trade agreement. It would have been bigger still had India not withdrawn a year ago. After eight years of what Malaysia’s trade minister, Mohamed Azmin Ali, called “negotiating with blood, sweat and tears”, the remaining countries have achieved a victory for regional co-operation at a time when covid-19 has ravaged the global economy.

Yet opinions vary wildly as to the significance of that achievement. Some see RCEP as so unambitious as to be largely symbolic. Others see it as an important building block in a new world order, in which China calls the shots all over Asia.

The truth lies somewhere in between. RCEP does not herald a dramatic liberalisation of Asian trade. Its origins are as a kind of tidying-up exercise: joining together in one overarching compact the various free-trade agreements (FTAs) between the ten-member Association of South-East Asian Nations (ASEAN) and several other countries in the Asia-Pacific: Australia, China, Japan, New Zealand and South Korea.

India withdrew because of worries its domestic industry would be swamped by Chinese imports. That removed the main logjam standing in the way of an agreement. But, since India would have been the third-biggest RCEP economy, and is party to very few bilateral trade agreements, its departure also deprived the agreement of some of its main market-opening benefits. The door has still been left open for India to join, but in the past year its relations with China have deteriorated on a number of fronts. Liu Zongyi, a Chinese academic writing in a Communist Party tabloid, Global Times, gloated that India has missed “its last chance to integrate into the globalisation process”.

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RCEP’s membership overlaps with that of another big regional trade pact, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). That deal, which was signed in 2018 by 11 countries, was originally called the Trans-Pacific Partnership and was meant to include America, only for Donald Trump to pull out as soon as he took office. When the two agreements were under negotiation, American officials would snootily dismiss RCEP as an inferior, 20th-century-style pact, focused on tariffs and rudimentary trade-facilitation measures, in contrast to the TPP, with its coverage of areas such as environmental and labour standards, and rules for state-owned enterprises.

It is true that RCEP is less ambitious, as would be expected of an agreement whose signatories range from the very rich, such as Japan and Singapore, to the very poor, such as Laos and Myanmar. It eliminates, by one estimate, about 90% of tariffs, but only over a period of 20 years after coming into effect (which will require all 15 countries to ratify it). Its coverage of services is patchy and it hardly touches agriculture. Japan, for example, will maintain high import duties on some “politically sensitive” agricultural products (rice, wheat, beef and pork, dairy and sugar), which are cut under the TPP.

But RCEP does break new ground in harmonising the disparate rules-of-origin provisions in ASEAN’s various FTAs, and setting regional-content rules so that intermediate goods can be sourced from any of the 15 countries. As a result RCEP is expected to have a noticeable economic impact. A paper from the Peterson Institute for International Economics by Peter Petri and Michael Plummer cites modelling showing that it will raise global GDP in 2030 by an annual $186bn (compared with a gain of $147bn from the CPTPP). It says the benefits will be especially large for China, Japan and South Korea. It will also boost efforts by those three countries to reach their own trilateral FTA, which has been under negotiation for as long as RCEP and is bogged down in political recriminations.

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China will gain in other ways, too. In joining its first plurilateral trade agreement, it can present itself as committed to trade liberalisation at a time when America seems relatively disengaged from the region, and when it is still pursuing a trade war with China. Li Keqiang, China’s prime minister, revelled in the signing, calling RCEP “a victory of multilateralism and free trade” and, more lyrically, “a ray of light and hope amid the clouds”.

It will accentuate a regional tilt in China’s trade. A pattern dominated by supply chains for manufactured goods that stretched across various Asian countries before being exported to the West is changing. In the first half of this year, ASEAN overtook the European Union as China’s biggest trading partner, according to the Institute of International Finance, a Washington-based financial-industry association.

In ASEAN, at whose virtual summit RCEP was signed, the agreement will be taken as a vindication of its slow, incremental approach to negotiations in everything from trade to the South China Sea. But in the long term, some of its members also worry about a drift into a world in which China’s economic, political and military might dominate Asia. For that reason, many in ASEAN will hope that under Joe Biden, America will re-engage more energetically with the region. That, after all, was why the Obama administration pursued the TPP so doggedly. Yet it seems unlikely that Mr Biden will try to bring America into the successor agreement. He has many other battles to fight. Asia will continue to be remade by China’s growing heft and by America’s comparative neglect.

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