Once implemented, the RCEP will be the world`s largest trade agreement, covering about 30% of global GDP and one-third of the world`s population. It will be larger than other major trading blocs, including the European Union, the U.S.-Mexico-Canada Agreement (USMCA) and the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) agreement. The RCEP will be open to membership by other new members 18 months after it comes into force, although membership procedures have yet to be adopted by the RCEP Joint Committee. A likely and relatively undisputed candidate is Hong Kong, which reached a free trade agreement with ASEAN in 2019. Although the RCEP was originally an ASEAN-led initiative, many now see it as an alternative to the China-backed CPTPP, which excludes China but encompasses several Asia-Pacific countries4. The United States is particularly absent from the two agreements, which, over time, are likely to strengthen intra-Asian integration around China (in the case of the RCEP) and Japan (in the case of the CPTPP). Although it was never involved in the RCEP negotiations, the United States withdrew in January 2017 from the former CPTPP iteration, the Trans-Pacific Partnership (TPP). As the U.S. presidency approaches, it remains unclear how quickly President-elect Joe Biden will be able to develop a trade approach for Asia to rebalance U.S.
economic and strategic interests, including whether the United States should attempt to renegotiate or directly associate with the terms of the CPTPP. Such a decision will not be made quickly, especially because of staffing problems in important government positions, a potentially divided congress, and especially the imminent end of the Trade Promotion Authority (TPA) – also known as the Rapid Promotion Authority, where the President of the United States can negotiate trade agreements that Congress can approve or reject, but cannot amend them – July 1, 2021. For example, U.S. companies may decide to increase their investments in production facilities or relocate much of their operations within RCEP/CPTPP countries to take advantage of the preferences of the agreements and participate in the Asia-Pacific market, contrary to the current U.S. policy of rehabilitating U.S. production and employment activities. Trade in services: The RCEP establishes rules on the provision of services, including the obligation to provide access to foreign providers (market access), to treat domestic and foreign suppliers on the same process (national treatment) and to treat foreign suppliers at least in the same way as suppliers from other non-RCEP countries (the nation`s most favoured treatment (MFN). However, planning specific obligations for services (as in the foregoing for trade in goods) is complex.