Good for Switzerland ?: China celebrates diplomatic coup with XXL free trade agreements

15 countries signed an XXL trade agreement in a virtual conference in Vietnam. 20 minutes answers the most important questions about the RCEP program.

The “regional and global economic partnership” or RCEP, as it is abbreviated in the pact, is the largest free trade agreement in the world. It is significantly larger than the current Asia-Pacific Free Trade Agreement (CPTPP) and comprises 2.2 billion people and about a third of global economic output. Experts also believe that the region will be responsible for more than half of global economic output in ten years.

15 states. In addition to the second largest economy, China and the ten ASEAN countries also participate in the agreement Vietnam, Singapore, Indonesia, Malaysia, Thailand, Philippines, Myanmar, Brunei, Laos and Cambodia, Japan, Australia, South Korea and New Zealand. The signing came on Sunday after eight years of negotiations and after India withdrew because it didn’t want to open up so much.

Details have not yet been released. The agreement is intended to facilitate trade in industrial goods, as Julius Baer economist Sophie Altermatt told 20 Minuten. “It harmonizes the inconsistent rules of origin of the various free trade agreements within ASEAN countries and thus lowers costs for companies with commercial activities in the region.” About 90% of current tariffs and quotas are expected to be lifted in 20 years.

According to experts, the deal is a great success for China. It is China’s first multilateral free trade agreement and is considered an alternative to the TPP launched under Barack Obama, from which Donald Trump later withdrew. This creates new free trade agreements between China and Japan and Japan and Korea, as economist Julius Baer Altermatt puts it. Chinese Prime Minister Li Keqiang spoke of “victory for multilateralism and free trade”. The United States is lagging behind in its efforts to curb China’s economic dominance.

In Asia, Taiwan may be a loser because it is not a member of the agreement, as David Kohl, Julius Baer’s chief economist, says. “Competitors in Japan and Korea in the region are now more attractive partners.” From a diplomatic point of view and in the competition for the world order, the United States is the loser. But Britain is also under pressure because it relied on bilateral deals after the Brexit decision. The economic disadvantages for the United States or Britain are, however, “rather minor”, as Kohl says.

“It is an initiative against protectionism in a region whose economy risks becoming the heavyweight of the world economy. This is good for Switzerland as an exporting nation, “says Jan Atteslander, foreign trade expert at the economic umbrella organization Economiesuisse. The facilitation of trade would bring Switzerland new market potential thanks to growth in the region, both in exports and with investments in local production.