Largest Trade Agreement

The RCEP will focus mainly on standardizing trade rules in all countries, in order to facilitate citizens` activity. For example, the RCEP will impose a new single preferential rate access regime on one of the 15 RCEP markets. The trade agreement, which has been negotiated for eight years, has been widely described as important, although it largely fulfils the role of repeating the terms of several existing trade agreements between members of the Association of Southeast Asian Nations (ASEAN) – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam – and grouping them into a single multilateral pact with non-ASEAN countries. Australia, China, Japan, New Zealand and South Korea to form, by some measures, the world`s largest trading bloc. While China remains the world`s largest exporter of clothing, its share continues to decline, while that of other Asian countries is increasing. However, although China exports less clothing, it exports more fashion textiles to less expensive markets such as Vietnam and Bangladesh, where garments are assembled. Now, there is an important new factor to consider when brands make a choice between these two sourcing hubs. India has participated in previous rounds of negotiations, but withdrew in 2019, fearing that low import barriers could harm vulnerable domestic industries such as agriculture, milk and textiles. Regional observers have found that the country – and its market of nearly 1.4 billion people – has the door open to join the agreement in the future.

This means that the United States does not participate in either of the two major trade agreements in the Asia-Pacific region. And the Trump administration`s unpredictable and sometimes compulsive trade policy – and U.S. tariffs, which even target close allies like the European Union – have increasingly isolated the United States on the international stage. U.S. fashion companies, in particular, are relocating their production from China for items destined for the U.S. market, due to the increase in tariffs on imports from China, caused by the ongoing trade war. Just a few years ago, Levi`s purchased 16 percent of the products for the U.S. market from China. In recent years, the brand has reduced this share to less than 2%, which increasingly excludes production in Vietnam and Bangladesh or collaborates with existing Chinese suppliers with subsidiaries in Southeast Asia. The RCEP agreement will accelerate these measures, which are increasingly in favour of the signatory countries.

Chinese consumers want to spend more money, but they have shortened the time to shop, said Chen Xiaodong, CEO of Alibaba-inTime Stores. Chinese buyers are particularly willing to pay a lot of money for luxury goods and cosmetics, he added. InTime is one of the largest department store operators in China and was acquired by Tech-Jongleur Alibaba in 2017. Chen said InTime had already accessed online shopping trends such as live streaming before the pandemic was successful, but the virus had accelerated “the digitization process for physical stores.” (CNBC) From a geopolitical point of view, this is the second major multilateral trade agreement in Asia-Pacific, marked by the absence of the United States after its withdrawal from the Trans-Pacific Partnership (now CPTPP) in January 2017.