The Regional Comprehensive Economic Partnership (RCEP) will create a free-trade zone covering about 30 per cent of the world’s gross domestic product, trade and population

The 15-nation Regional Comprehensive Economic Partnership (RCEP) deal was signed in November, but will only come into effect 60 days after it is ratified by six of the Asean members and three of the other countries

Japan’s parliament on Wednesday approved participation in the world’s largest free-trade deal, signed by 15 Asia-Pacific countries including China and the 10-member Association of Southeast Asian Nations (Asean).

The Regional Comprehensive Economic Partnership (RCEP) will create a free-trade zone covering about 30 per cent of the world’s gross domestic product, trade and population.

It will be Japan’s first trade deal involving China and South Korea, its biggest and third biggest trade partners.

The pact, signed by the 15 countries in November, will come into effect 60 days after it is ratified by six of the Asean members and three of the other countries.

As of Wednesday, Singapore, Thailand China have completed procedures for ratification.

The deal will eliminate tariffs on 91 per cent of goods and introduces common rules on investment and intellectual property to promote free trade.

The government expects the trade accord will boost Japan’s gross domestic product (GDP) by 2.7 per cent and create 570,000 jobs.

RCEP groups the 10 Asean members – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – plus Japan, China, South Korea, Australia and New Zealand.

India was one of the founding members but skipped all negotiations from November 2019 due to concern that its trade deficit with China would grow.

RCEP is seen as a China-backed alternative to the US-led Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

In June last year, researchers at the Peterson Institute for International Economics found that RCEP, a trade deal that took seven years to negotiate, would add 0.4 per cent to China’s real income by 2030, while the trade war with the United States would trim 1.1 per cent, should current hostilities persist.

A study conducted in 2019 by researchers at the University of Queensland and the Indonesian Ministry of Finance found that RCEP would add just 0.08% to China’s economy by 2030. Over the same period, the trade war with the US would slice 0.32% from its gross domestic product (GDP).

"China has taken the lead in ratifying the RCEP, underscoring the great importance and full support from the Chinese government for the early implementation of the deal" said Wang Shouwen.

Researchers at the Beijing-backed Chinese Academy of Social Sciences (CASS) were slightly more bullish on the prospects of RCEP for China’s economy, estimating that over 10 years it would add 0.22% to real GDP growth and 11.4% to China’s total exports, should the schedule for trade liberalisation unfold as planned.

Last month, Wang Shouwen, China’s vice-commerce minister, said the members of the Asia-Pacific trade pact were aiming for it to take effect from January 1st 2022.

“China has taken the lead in ratifying the RCEP, underscoring the great importance and full support from the Chinese government for the early implementation of the deal,” Wang said.

Let's hope it turns out to be a good deal for Australia.