Fifteen countries have formed the world’s largest trading bloc, covering nearly a third of the global economy.
The Regional Comprehensive Economic Partnership (RCEP) is made up of 10 Southeast Asian countries, as well as South Korea, China, Japan, Australia and New Zealand.
The deal was signed on Sunday on the sidelines of a meeting of the Association of Southeast Asian Nations (Asean), hosted by Vietnam.
“I am delighted to say that after eight years of hard work, as of today, we have officially brought RCEP negotiations to a conclusion for signing,” said Vietnam’s Prime Minister Nguyen Xuan Phuc.
“RCEP will soon be ratified by signatory countries and take effect, contributing to the post-COVID pandemic economic recovery,” he said.
The China-backed deal excludes the United States, which had left a rival Asia-Pacific grouping under President Donald Trump.
Amid questions over Washington’s engagement in Asia, RCEP may cement China’s position more firmly as an economic partner with Southeast Asia, Japan and Korea, putting the world’s second-biggest economy in a better position to shape the region’s trade rules.
Trump pulled his country out of the Trans-Pacific Partnership (TPP) shortly after taking office. The deal was to involve 12 countries and was supported by Trump’s predecessor Barack Obama as a way to counter China’s surging power in the region.
The US is now absent from both RCEP and the successor to the Obama-led TPP, leaving the world’s biggest economy out of two trade groups that span the fastest-growing region on earth.
By contrast, RCEP could help Beijing cut its dependence on overseas markets and technology, a shift accelerated by a deepening rift with Washington.
RCEP will account for 30% of the global economy, 30% of the global population and reach 2.2 billion consumers, Vietnam said.
The new free trade bloc will be bigger than both the US-Mexico-Canada Agreement and the European Union.