India's Prime Minister Narendra Modi (left) shakes hands with China's Premier Li Keqiang at the 3rd Regional Comprehensive Economic Partnership (RCEP) Summit in Bangkok on Monday, on the sidelines of the 35th Association of Southeast Asian Nations Summit. India did not make a final decision on RCEP, as other member states moved to conclude their negotiations and plan to sign the deal in 2020. Photo: AFP

 

China and 14 other partners in the Asia-Pacific region on Monday concluded years-long negotiations for what is expected to be the world's largest trade pact. They plan to sign the deal next year, marking a historic step for trade and economic integration in one of the world's most vibrant regions that will likely help lift up global trade amid profound uncertainties.

Though India has not yet jumped on board for the Regional Comprehensive Economic Partnership (RCEP), the move on Monday sent a resounding message in support of multilateralism and free trade and rejected rising trade protectionism, most notably from the US, analysts noted. 

Following a meeting on the sidelines of the Association of Southeast Asian Nations (ASEAN) summit in Bangkok, Thailand on Monday, leaders of the RCEP member states announced that they had concluded text-based negotiations and essentially all their market access issues, and plan to sign the final deal next year, according to a joint statement. 

India did not make a final decision on Monday, as it still has "significant outstanding issues which remain unresolved," the joint statement said, noting that negotiations will continue. 

Still, Monday's move by the 15 other members states largely capped off more than seven years of tough negotiations and marked a historic moment for regional and global trade cooperation, analysts said.

Historic move

"It is truly a historic moment and a big win for multilateralism and free trade," Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations in Beijing, told the Global Times on Monday, noting that the RCEP will not only boost regional trade but also lift global trade as a whole.

Once signed, the RCEP will become the world's largest free trade pact, covering about half of the world's population and more than one-third of the global GDP, and 40 percent of global trade. Under the agreement, tariffs will be reduced significantly and other trade barriers will also be removed.

"This should be a very clear message and example that countries, despite differences in their political systems, could put their differences aside and seek pragmatic solutions," Chen said. "It could be seen as a direct rejection of US unilateralism and trade protectionism."

The US' unilateral and protectionist policies may have even helped push forward the negotiations, and the focus of the US on geopolitical rivalry over economic cooperation will further squeeze its standing in the Asia-Pacific region, analysts said.

"The US pays great importance to the Asia-Pacific, but the quality of its economic cooperation with the region is not very satisfying," Han Feng, a professor at Beijing Foreign Studies University, told the Global Times on Monday, adding that the US has been mired in domestic politics, and shifting its focus more to priority bilateral deals.

The US only sent what has been described as a downgraded delegation to the ASEAN summit and has been largely sidelined as the meetings were focused on the RCEP.

Negotiations for the deal started in November 2012 but have picked up in recent years, as the US withdrew from the now-defunct Trans-Pacific Partnership and adopted a host of protectionist moves that target many of the RCEP members.

India's tough decision

Though India held back on Monday, it will not affect the RCEP process and that India will ultimately join, analysts said.

India reportedly made some last minute demands on market access and tariff issues, but the other member states decided to move forward, while keeping the door open to the South Asian giant.

"It is within expectations that the Indian side showed reluctance because [Prime Minister Narendra] Modi is facing a very tough decision," Qian Feng, a research fellow at the national strategy institute of Tsinghua University, told the Global Times on Monday. "On one hand, he faces huge domestic pressure for not signing the deal; on the other hand, India can't afford missing out on the opportunity, especially as its economy slows down."

A statement on Modi's official website said on Monday that the Indian prime minister had sought to dispel the notion of India being reluctant and that India remains committed to a comprehensive and balanced outcome.

Some had speculated that India's decision on Monday had to do with China, as India plays a role in countering China within the RCEP. But Qian said that such speculations are baseless and both countries are in favor of free trade. 

"This was India's negotiating tactic, but has nothing to do with China," he said, adding that India will likely join in the end.