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SCMP Reporter

The Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement that is often characterised as a China-led response to the Trans-Pacific Partnership (TPP) put forward by the US.
The pact is currently being negotiated among the 10 Asean member states as well as Australia, China, India, Japan, New Zealand and South Korea.
It is expected to be signed in 2019 after several delays in negotiations.

How important is it?
Taken together, the 16 countries negotiating the RCEP encompass about one-third of global GDP and almost half the world’s population.
The pact aims to cover the trade in goods and services, as well as investment, intellectual property and dispute resolution.
After US President Donald Trump withdrew the US from the TPP, the RCEP was framed as proof of Asian countries’ commitment to free trade. But the deal has also been criticised for setting neither environmental nor labour standards, nor tackling issues related to procurement processes and corruption.
Concerns have also been raised about disparities between member countries, and the possibility that the pact could exacerbate global inequality.
The deal also lacks provisions for the liberalisation of state-owned companies.
Explained: the CPTPP trade deal
What is the difference between TPP and RCEP?
The two deals have been shaped by the countries that led negotiations: the US and China, respectively.
The TPP was a more ambitious plan, including market access for goods and services as well as regulations on labour, the environment, intellectual property and state-owned companies.
The RCEP, on the other hand, is more narrowly focused on standardising tariffs across the region, as well as improving market access for services and investment.
The latter also includes special provisions for developing economies, such as gradual tariff liberalisation and transition times.
According to forecasts from the Asian Development Bank in 2016, the TPP had the potential to provide up to US$400 billion in global income benefits before the US withdrawal, whereas the RCEP’s contribution would amount to an estimated US$260 billion.

Will RCEP be signed any time soon?
In the latter half of 2018, representatives of several participant countries were quoted as expressing their hope for a “substantial conclusion” to negotiations by the year’s end.
The emergence of economic nationalism in the US and Trump’s trade war with China have also led to heightened interest in a deal throughout the region.
An agreement could be signed after this year’s elections in Indonesia and India, but obstacles such as New Delhi’s reluctance to open its markets to Chinese products remain. As a result, India may be allowed to phase out tariffs on certain goods over a longer period to protect some of its industries.


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Regional Comprehensive Economic Partnership (RCEP)

Explained: Regional Comprehensive Economic Partnership (RCEP)

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U.S. President Donald Trump speaks to the media as he departs the White House in Washington, D.C. to attend WWI Centenary in Paris, France on Nov. 9, 2018. (Olivier Douliery/Abaca Press/TNS)

FILE PHOTO: India's Prime Minister Narendra Modi gestures as he addresses the gathering during the 'Global Mobility Summit' in New Delhi, India, September 7, 2018. REUTERS/Adnan Abidi/File Photo

Ministers from 16 Asia-Pacific countries pose ahead of a meeting on the Regional Comprehensive Economic Partnership free trade pact in Singapore. Photo: Kyodo

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Cargo is loaded on a ship at Tianjin port in China. Photo: AP

Japanese Prime Minister Shinzo Abe, center, joins hands with trade ministers from Asian countries for a group photo during the Regional Comprehensive Economic Partnership (RCEP) meeting in Tokyo Sunday, July 1, 2018. Trade ministers from 16 Asian countries are meeting in Tokyo on a regional trade pact, highlighting efforts to ensure free and rules-based commerce in the face of an increasingly protectionist United States under President Donald Trump. (Sadayuki Goto/Kyodo News via AP)

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Explained


The regional trade pact has been cast as China’s response to the Trans-Pacific Trade Partnership but does not set environmental or labour standards



The regional trade pact has been cast as China’s response to the Trans-Pacific Trade Partnership but does not set environmental or labour standards.


Trade

US-China trade war

Trans-Pacific Partnership (TPP)

US-China trade war: All stories

Provide background, definition and detail of a specific topic, helping the reader understand how something works or what has happened in the past.  (Eg. What is Nafta? US and Mexico are on the verge of revising trade deal.)


Explainer

Explainer | Explained: Regional Comprehensive Economic Partnership (RCEP)

The regional trade pact has been cast as China’s response to the Trans-Pacific Trade Partnership but does not set environmental or labour standards

How important is it?