Hanoi, Vietnam – New Zealand Prime Minister Jacinda Ardern and Trade Minister Damien O’Connor at the signing ceremony in Auckland. A lobby group concerned about a major trade deal New Zealand signed this evening says the Covid-19 pandemic provides a strong reason why such agreements should be ditched.

Fifteen countries in the Asia-Pacific region have signed the Regional Comprehensive Economic Partnership (RCEP) deal.

It’s the world’s largest free trade agreement, has been eight years in the making and came into fruition today via a virtual summit hosted in Hanoi, Vietnam.

The agreement encompasses Japan, China, South Korea, the 10 members of the Association of Southeast Asian Nations (ASEAN), Australia and New Zealand, creating a free trade zone, which covers nearly a third of the world’s trade and economic output.

Leaders from all 15 countries watched via video as Ministers signed the deal: from Auckland, Trade Minister Damien O’Connor signed for New Zealand.

Speaking afterwards, he told reporters it would bring security and certainty to exporters.

“This will mean an extra $2 billion that will come to New Zealand once the deal is ratified so huge potential.”

He singled out the education sector and the primary industry sector, particularly meat, as among the main ones to benefit.

One of the aims in coming years is to progressively lower tariffs across many areas.

The pact will take effect once enough participating countries ratify the agreement domestically within the next two years.

A major power, India pulled out last year, claiming its key concerns about agriculture and domestic industry were not being addressed.

Beef and Lamb NZ and the Meat Industry Association have welcomed the sealing of the deal.

Beef and Lamb’s chief executive, Sam McIvor, said it will help to deepen cooperation and strengthen trade in the region.

He said it’s disappointing, though, that India is not joining, and he hopes it will eventually come on board.

A fast-track process for India’s accession has been established, should it wish to join RCEP in the future.

The Ministry of Foreign Affairs and Trade said RCEP remains a potential gamechanger for trade in the Asia-Pacific region.

Boost for China
Amid questions over the US’s engagement in Asia, RCEP may cement China’s position more firmly as an economic partner with Southeast Asia, Japan and Korea, putting the world’s second-biggest economy in a better position to shape the region’s trade rules.

The US is absent from both RCEP and the successor to former US president Barack Obama-led Trans-Pacific Partnership (TPP), leaving the world’s biggest economy out of two trade groups that span the fastest-growing region on earth.

By contrast, RCEP could help Beijing cut its dependence on overseas markets and technology, a shift accelerated by a deepening rift with Washington, said Iris Pang, ING chief economist for Greater China.

RCEP will account for 30 percent of the global economy, 30 percent of the global population and reach 2.2 billion consumers, host Vietnam said today.

Group says treaty won’t help NZ
But Edward Miller, from It’s Our Future, fears New Zealanders won’t benefit.

“We’re seeing a huge secret agreement being negotiated where we don’t know what the risks are and from the economic modelling that we’ve seen there’s very little economic benefit to be gained.

“So we don’t know why the government continues to do secret deals that are against our national interests.”

Miller said there had been no effective public consultation over the deal, some parts of which attack New Zealand’s national interests.

“The economic crisis that has come as a result of Covid-19 is the biggest single economic event that we’ve had in New Zealand history.

“We need to preserve a policy space that will be able to ensure that we have a recovery that suits our people, our planet, our workers’ rights etceteras. We can’t guarantee that under RCEP.”

Miller said It’s Our Future would keep pushing the government to pull out of international trade deals.

Explainer: What happens now the RCEP trade deal has been signed?

Fifteen Asia-Pacific economies, including New Zealand, signed what could become the world’s largest free trade agreement over the weekend. It covers nearly a third of the global population and about 30 percent of global gross domestic product.

The Regional Comprehensive Economic Partnership (RCEP) will progressively lower tariffs and aims to counter protectionism, boost investment and allow freer movement of goods within the region.

Who has signed?
RCEP includes China, Japan, South Korea, Australia, New Zealand and the 10 members of the Association of South East Asian Nations (ASEAN): Brunei, Vietnam, Laos, Cambodia, Thailand, Myanmar, Malaysia, Singapore, Indonesia and the Philippines.

India was involved in early discussions but opted out last year over concerns related to cheap Chinese imports.

Member states have said there is still room for India to join RCEP, however. Anyone can join RCEP 18 months after it comes into force but India, as one of the original negotiating partners, can join at any time once the deal comes into effect.

What happens next?
RCEP was signed at the end of a four-day ASEAN summit in Hanoi on Sunday and must now be ratified before coming into effect, a process that will take months to start and years to complete.

The 510-page, 20-chapter agreement was not made public before the ceremony because “a number of parties would not consent to the release of the text prior to signature”, New Zealand’s foreign ministry said in a statement.

According to copies of the agreement uploaded to the foreign ministry websites of RCEP member states on Sunday, the deal must be ratified by at least six ASEAN countries and three non-ASEAN signatory countries before it can come into effect.

East Asian rivalry
Notably, RCEP marks the first time China, Japan and South Korea have been brought together under a single trade agreement – a process that has been otherwise marred by historical and diplomatic disputes.

South Korea’s President Moon Jae-in claps as Minister for Trade Yoo Myung-hee (right) holds up the signed RCEP agreement at the ASEAN summit held online in Hanoi on November 15, 2020. South Korea’s President Moon Jae-in claps as Minister for Trade Yoo Myung-hee (right) holds up the signed RCEP agreement at the ASEAN summit held online in Hanoi on November 15, 2020.

Last year, at the height of a trade dispute between Japan and South Korea, which had its roots in a dispute stemming from Japan’s wartime colonization of the Korean peninsula, South Korean officials said Japanese trade restrictions violated the “spirit” of the RCEP.

“Japan may find significant benefits [with RCEP], as it now has preferential access to South Korea and China, which it did not have,” said Deborah Elms of the Singapore-based Asian Trade Centre.

When will it kick in?
RCEP provides some flexibility for less-developed members to implement the practical and legislative changes it requires. Cambodia and Laos, for example, have three to five years to upgrade customs procedures.

Specifically which areas are open to tariff reductions under RCEP is complex and changes from country to country. Some states have listed what RCEP includes, others have listed what it does not.

For countries which already have free trade agreements with each other, an added benefit of RCEP is that it creates a common set of rules of origin, which will facilitate easier movement of goods between the 15 members.

How does RCEP compare with CPTPP?
The idea of RCEP, hatched in 2012, was seen as a way for China, the region’s biggest importer and exporter, to counter growing US influence in the Asia-Pacific. It gained momentum when Trump withdrew the United States from the Trans-Pacific Partnership (TPP) in 2017.

Chinese Premier Li Keqiang attends the signing ceremony of the RCEP agreement along with Commerce Minister Zhong Shan, who signed on behalf of China. Chinese Premier Li Keqiang attends the signing ceremony of the RCEP agreement along with Commerce Minister Zhong Shan, who signed on behalf of China.

The TPP has since been renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and it includes seven RCEP members, but not the United States.

RCEP focuses heavily on cutting tariffs and increasing market access but is seen as less comprehensive than the CPTPP.

It also requires fewer political or economic concessions and has less emphasis on labour rights, environmental and intellectual property protections and dispute resolution mechanisms.

RCEP’s market size is nearly five times greater than that of the CPTPP, with almost double its annual trade value and combined gross domestic product.

“For an a agreement signed with countries that did not volunteer to participate and with such incredibly diverse membership, the quality of RCEP actually exceeds expectations,” said Elms at the Asian Trade Centre.

“It will deliver significant economic benefits to many firms.”