Australian Trade Minister Simon Birmingham and Scott Morrison (Image: AAP/Lukas Coch)

The ink has now dried on the Regional and Comprehensive Economic Partnership (RECP), a mammoth trade deal signed yesterday by Australia and 14 other countries across the Asia-Pacific.

Here in Australia, it’s been described in triumphant terms. It’s been called the biggest trade deal in human history, a multi-billion-dollar injection into the regional economy, and an opportunity to cool off an increasingly testy relationship with China while also diversifying Australia’s trading partners.

In the United States, the RCEP has been framed as a sign of Beijing’s dominance in the region. International media outlets have also raised concern about the extent of its trade liberalisation, and Malcolm Turnbull has criticised it as having “low ambition”.

So how big a deal is the RCEP really?

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What is the RCEP?

There’s no denying the RCEP is substantial. Yesterday’s signing ceremony, held over video, followed eight years of tough, secretive negotiations.

The deal brings together the countries in the Association of South-East Asian Nations (like Indonesia and Vietnam), along with Australia, New Zealand, China, Japan and South Korea.

And while Australia already has free trade agreements (FTAs) with all the RCEP countries, the deal helps eliminate a range of tariffs throughout the bloc, while streamlining and simplifying various other trading rules. There are new rules and provisions for areas like e-commerce, intellectual property and telecommunications.

“It helps to unify the ‘spaghetti-bowl’ of a lot of these bilateral FTAs — and that’s actually a quite significant contribution,” says James Laurenceson, director of the University of Technology Sydney’s Australia-China Relations Institute.

Outside of Australia, the agreement has some critical benefits. Japanese news outlets emphasised the unprecedented nature of a free trade agreement between Japan, China and South Korea. The Korea Times noted the agreement would boost the country’s exports and help diversify its trade partnerships beyond the United States and China. China will eliminate its 8% tariffs on most Japanese goods, which is welcome news for Japan’s automobile sector.

But there’s also a lot the RCEP doesn’t do. For starters, it’s a less ambitious deal than the Trans-Pacific Partnership (TPP), a rival regional agreement initially led by the United States before Donald Trump withdrew from it.

While the TPP removed almost 100% of tariffs, the RCEP removes just 90%. The former agreement also has contains provisions on labour rights and the environment.

And as the Financial Times noted, the RCEP doesn’t do much work on agriculture, one of the world’s most notoriously over-protected industries. Japan, for example, won’t lift its tariffs on politically-sensitive, protected industries like beef, pork and rice.

How the US sees it

In the US media, the RCEP has been framed as a sign of China’s increasing geopolitical dominance of the Asia-Pacific region, and a prospective challenge for president-elect Joe Biden.

The Washington Post described the deal as a “coup” for Beijing, The New York Times warned it could “help further cement China’s image as a dominant economic power in the region”, and The Wall Street Journal suggested it would test Biden’s stance on China policy and capacity to deepen American engagement with the region. Bloomberg, meanwhile touted it as a “China-led” deal.

But Laurenceson says the US framing of the RCEP as a China-led deal is inconsistent with how the actual signatories see it. “I think that view reveals a lot about the United States itself,” he says. “The RCEP was never a China-led deal, it was an ASEAN-led deal.”

In Australia, the RCEP has been treated as an opportunity to overcome a hostile trade and diplomatic relationship with China. The AFR’s editorial calls it “a chance to diversify China risk”, while the Nine newspapers call it a “lifeline for Australia-China relations”.

Notable absentees and the signalling effect

Much foreign coverage of the RCEP has also focussed on two key absentees — India and the United States. India was involved in negotiations until last year, when it pulled out amid concerns over about Chinese dumping and impacts on domestic agriculture.

And under President Donald Trump, the US increasingly turned its nose at multilateralism. But the RCEP could change things. Japanese officials hope the success of the framework could push the Biden administration to re-embrace multilateral trade deals, The Japan Times reports.

And while many of the concessions and rule changes in the RCEP might be small on their own, the signalling effect of such a large deal can’t be overstated.

Simply bringing China into the fold is a major achievement, according to Nikkei. And, as Laurenceson says, the RCEP is an important statement of the region’s commitment to free trade at a time when economic nationalism has, in some parts of the world, made a return.

“It’s still significant that Asia-Pacific can get this done in the face of other parts of the world like the US and Europe heading in a different direction on trade.”