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RCEP to Create World’s Largest Free Trade Bloc
The 35th ASEAN was concluded and progress has been made on the Regional Comprehensive Economic Partnership or RCEP for short. India decided not to join the free trade bloc as protectionism prevailed in one to the world’s most populous nations. The opening statement of the Chairman read “We, the Heads of State/Government of ASEAN Member States, gathered in Bangkok for the 35th ASEAN Summit on 2-3 November 2019. We reiterated the importance of continuity and sustainability in ASEAN Community-building efforts and commit to continue promoting partnership for sustainability, within ASEAN and in ASEAN’s relations with the international community, in order to realise a people-oriented, people-centred ASEAN Community that leaves no one behind and looks to the future.”
What is ASEAN?
ASEAN stands for Association of South-East Asian Nations and consists of Singapore, Brunei, Malaysia, Thailand, Philippines, Indonesia, Vietnam, Laos, Cambodia and Myanmar. Those ten countries form the core, but ASEAN Plus Three was the first attempt at wider integration across Asia. The three countries consist of China, Japan and South Korea. This was further expanded to become the ASEAN Plus Six with Australia, New Zealand and India joining the ranks. ASEAN Plus Six accounts for roughly two-fifths of global GDP and on-half of the global population, growing fast in both categories.
ASEAN has plenty of integration programs which intent to create a single market, monetary and defense union as well as a tourism hub. Some of the more crucial initiatives include the 2020 ASEAN Banking Integration Framework, the Political-Security Community (APSC) Blueprint , the Socio-Cultural Community (ASCC) Blueprint and the Defence Industry Collaboration (ADIC). The Asian Development Bank was tasked with exploring the Asian Currency Unit (ACU).
The Regional Comprehensive Economic Partnership (RCEP)
RCEP is expected to be signed in 2020 and it will create the worlds largest free trade bloc, according to 2017 data this translates to 3.4 billion people and GDP of almost $50 trillion. RCEP negotiations started in November 2012 and the text was agreed on this month in Thailand during the 35th ASEAN summit and Australian Trade Minister Simon Birmingham stated “As RCEP economies develop and their middle classes grow, this deal will open up new doors for Australian businesses and investors across our region.” South Korean President Moon Jae-in added “We need to protect the free-trade order and bring the global economy back on track.”
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RCEP - India, 15 Countries Vow to Create Largest Free Trade Bloc
India opted to pull out of RCEP for the time being as it fears several of its domestic industries will be under pressure, President Modi decided to go down the protectionist route. India is concerned about Chinese imports which will hurt its small businesses as well as commodity imports which could rattle its large scale of small farmers. Despite its reluctance to join, China as well as Australia stated that India is welcome to join when they are ready.
The 15 countries which joined RCEP released a joint statement which read “RCEP will significantly boost the region’s future growth prospects and contribute positively to the global economy, while serving as a supporting pillar to a strong multilateral trading system and promoting development in economies across the region. India has significant outstanding issues, which remain unresolved. All RCEP participating countries will work together to resolve these outstanding issues in a mutually satisfactory way. India’s final decision will depend on satisfactory resolution of these issues.”
Indian President Modi noted “When I measure the RCEP agreement, with respect to the interest of Indians, I don’t get a positive answer.” Some see RCEP better with India part of it, Prime Minister Scott Morrison stated “It is important to have India in and that is certainly our preference.” Not all agree, Singapore Management University Law Professor Henry Gao argues that RCEP without India is even more powerful for the 15 member countries. He further added “A mega trade deal like RCEP will only further accelerate the integration process and greatly boost trade and economic growth in the region.”
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