RCEP Explained: The World’s Biggest Trading Bloc Will Soon Be In Asia-Pacific

Trade and commerce are the lifeblood of the global economy. Naturally, agreements among nations in a certain geographical area help facilitate relationships in ways that are ideally beneficial for everyone involved.

In late 2020, the Regional Comprehensive Economic Partnership (RCEP) was signed, officially creating the biggest trade bloc in history. Here, we break down everything you need to know about it, from who’s involved to its implications.

Who’s in the RCEP, and Why Was it Created?

The RCEP is a free trade agreement between 15 nations in the Asia-Pacific region, and has been formalized after 28 rounds of discussion over eight years.

Member nations who are a part of the RCEP will benefit from lowered or completely eliminated tariffs on imported goods and services within the region in the next 20 years. Here are the countries which have signed on to be member nations:

Country Population (M) Nominal GDP ($B)
🇦🇺 Australia 25.7 $1,359
🇧🇳 Brunei 0.5 $12
🇰🇭 Cambodia 15.7 $26
🇨🇳 China 1404 $14,723
🇮🇩 Indonesia 270.2 $1,060
🇯🇵 Japan 125.8 $5,049
🇰🇷 South Korea 51.8 $1,631
🇱🇦 Laos 7.3 $19
🇲🇾 Malaysia 32.9 $338
🇲🇲 Myanmar 53.2 $81
🇳🇿 New Zealand 5.1 $209
🇵🇭 Philippines 108.8 $362
🇸🇬 Singapore 5.8 $340
🇹🇭 Thailand 69.8 $502
🇻🇳 Vietnam 97.4 $341
RCEP Total 2,274.2M $26,052B

 

Source: IMF

But there is still some work to do to bring the trade agreement into full effect.

Signing the agreement, the step taken in late 2020, is simply an initial show of support for the trade agreement, but now it needs to be ratified. That means these nations still have to give their consent to be legally bound to the terms within the RCEP. Once the RCEP is ratified by three-fifths of its signatories—a minimum of six ASEAN nations and three non-ASEAN nations—it will go ahead within 60 days.

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