The RCEP is a proposed free trade agreement with 16 members, including Australia, and is the world's largest economic bloc, covering nearly half of the global economy.
The 16 member countries of the RCEP
Blue: ASEAN Purple: ASEAN Plus Three Teal: ASEAN Plus Six
The Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) between the ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) and its six FTA partners (China, Japan, India, South Korea, Australia and New Zealand).
The RCEP is being widely viewed as the best hope for keeping world trade flowing after attacks by the USA on the World Trade Organisation (WTO), while they impose tariffs on China and other countries and block appointments to its appellate body.
With 16 member nations, RCEP is not a replacement for the WTO (which has 164) but it can be a backstop. It is the world's largest economic bloc and its members account for almost half the world’s population. In 2017, prospective RCEP member states accounted for a population of 3.4 billion people with a total Gross Domestic Product (GDP) of $49.5 trillion, approximately 39 percent of the world's GDP, with the combined GDPs of China and India making up more than half that amount. By 2050, the GDP of RCEP member states is likely to amount to nearly $250 trillion and its share of the global economy could account for half of the estimated $0.5 quadrillion global GDP.
Negotiations have dragged on for several years because of one major sticking point: the investor-state dispute settlement (ISDS) procedures. The WTO doesn’t have ISDS. Under its rules, governments can take action against governments under but corporations can’t sue governments. ISDS provisions, on the other hand, allow foreign (but not local) corporations to take on governments.
ISDS provisions were developed in the post-colonial period after World War II to compensate international investors for the direct expropriation or taking of property by governments. But over the past two decades they expanded to include “indirect” expropriation, “minimum standard of treatment” and “legitimate expectations”, which do not involve taking of physical property and do not exist in many national legal systems. Because lodging cases is very costly, they are mostly used by large global companies that already have enormous market power, including tobacco, pharmaceutical, agribusiness, mining and energy companies.
Both the United States and European Union are moving against ISDS provisions. In January the 28 EU member states decided to terminate ISDS arrangements between themselves. The EU is not including ISDS in any of its current negotiations, including those for a EU-Australia free trade agreement.
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