What's going on?
Leaders from 15 Asia-Pacific countries – whose apartments probably smell of rich mahogany – signed one of the biggest trade agreements in history on Monday.
What does this mean?
The “Regional Comprehensive Economic Partnership” (RCEP) is a deal between China, Australia, Japan, South Korea, and plenty more besides, and it covers a third of the world’s population and economic output. And it would’ve been bigger still if India – concerned China would throw its weight around – hadn’t withdrawn from talks in 2019.
The RCEP will help products move more freely from member to member by cutting the tariffs they have to pay. And it looks like it could be well worth it: economists reckon that by 2030, the deal could add almost $200 billion a year to the global economy.
Why should I care?
Zooming out: Buzzkill.
Asian countries might be forming new alliances, but the US has been leaving them altogether: just look at its withdrawal from the Trans-Pacific Partnership – a major trade deal involving Canada, Mexico, and many RCEP members – back in 2017. That’s left the world’s biggest economy out of two agreements with Asia’s heavy-hitters, and could see its influence over the world’s fastest-growing region continue to disappear. All that, while China reduces its dependence on overseas markets and technology…
The bigger picture: Tick tock…
It took almost a decade to negotiate the RCEP, which might come as some consolation to the UK: it’s been struggling to draft a post-Brexit trade deal with the European Union (EU) in a fraction of that time. The country’s only replicated about half the trade deals it had with third-party countries when it was part of the EU – and it still has to get the big one with the bloc itself across the line. But the clock is ticking: UK and EU officials need to sign it off by December 31st, when the new rules will come into effect.