Vietnam has officially signed on as a member of the Regional Comprehensive Economic Partnership (RCEP), and was one of 15 countries that signed the agreement on Sunday, thereby creating the world's largest free trade agreement.
The RCEP accord was signed within the framework of the virtual 37th ASEAN Summit and Related Summits hosted by Vietnam, and will include the ten member states of ASEAN along with five other countries in the Asia region.
The countries participating in the agreement include Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam.
Together, these 15 countries will form the world’s largest trade bloc, with a market of 2.2 billion consumers, and an estimated GDP $26.2 trillion USD, accounting for approximately 30% of the global population and GDP.
India was also supposed to become a member of the new regional trade group but pulled out of negotiations in 2019. Many of the countries participating in RCEP have expressed hope that India will join the trade group in the future, making it a true regional group that would then represent 3.6 billion people and be responsible for almost 40% of the world’s GDP.
The signing ceremony in Hanoi was attended by Vietnam’s Prime Minister Nguyen Xuan Phuc, Deputy PM and Minister of Foreign Affairs Pham Binh Minh, and leaders of Vietnam’s trade ministries and industry sectors as well as representatives of the countries involved in RCEP who were in Hanoi.
Prime Minister Nguyen said at the event that it has taken ASEAN and partner countries eight years to complete the RCEP negotiations and the new agreement opens up promising trade commitments for common development and prosperity,
The Prime Minister also said that he believed that the agreement will be quickly ratified and put into effect by its member countries, contributing to positive and integrated economic recovery that will benefit all of the participating countries, especially in light of the global COVID-19 pandemic and its effect upon the countries of the Asia-Pacific region.
Corporate executives as well as economists and government officials are excited that Vietnam is participating in RCEP and agree that it will bring both challenges and opportunities to Vietnam.
On the plus side, Vietnam is in RCEP from the very beginning and Vietnamese enterprises can take advantage of opportunities as soon as they arrive. On the negative side, these same Vietnamese companies will face increased competition from companies from other member countries.
Government officials are extremely about the benefits that can be derived from the agreement and note that Vietnam’s experience in international agreements (like the recent EVFTA); together with economic integration, and changes in administrative procedures and the overall investment environment, will allow Vietnam to overcome any challenges that arise from the agreement.
Once the 15 participating countries ratify RCEP, the trade group will allow other countries to join it. It is expected that India will apply to join RCEP, and many people are waiting to see whether the incoming administration of U.S. President elect, Joe Biden will seek to join the group.
The administration of Barrack Obama had planned for the U.S. to become a member of the Trans Pacific Partnership (TPP) agreement, but the administration of Donald Trump vetoed U.S. participation.
While Biden would presumably want to see the U.S. join both RCEP and TPP, if the U.S. Senate remains controlled by Republicans, it may become impossible for the U.S. to participate. Many Republican senators have expressed the view that the U.S. shouldn’t participate in any Asia focused regional trade groups that allow China to be a member.
Both democrats and many business people view this as a “stupid and short-term” policy that effectively is allowing China to have a greater say in formulating trade throughout Asia and limits the opportunities for U.S. companies who want to make investments and conduct business in the Asia Pacific region.