♪ >> this is al jazeera, these are the top stories. u.s. pharmaceutical company moderna shows the results say it's vaccine is 94.5% effective at renting the virus. pfizer said it's vaccine was 90% effective. it was warned that lives are at risk if donald trump continues to resist cooperating with the

transition team. president-elect biden: more people may die if we do not coordinate. the vaccine is important. how do we get the vaccine come out wicked over 300 million american -- vaccine, how do we get over 300 million americans vaccinated? >> the u.s. national security advisor says he would like to see the blockade on qatar resolved. he said the first step would be for bahrain to reopen airspace to qatari aircraft. peru's congress chooses a new interim president, the third leader in a week. ethiopia's government is sending

more troops to the northern region despite calls for mediation. hundreds have died in the conflict. armenians have marched on the capital yerevan, calling for the prime minister to resign. the agreement secured more territory for neighboring azerbaijan. those are your headlines. the news continues here on al jazeera after "inside story." ♪ >> 15 countries have signed the world's largest free-trade agreement.

china is in, the united states is out. why is the asia-pacific partnership so important and how will it help the regional economy? this is "inside story." hello. welcome to the program. a third of the global economy comes under the new regional comprehensive economic partnership or rcep. china, 10 southeast asian nations along with south korea and japan, and new zealand have signed up. the u.s. is excluded, leaving china as the dominant economy in the bloc. first, this report. >> after eight years of talks, the regional comprehensive economic partnership or rcep is

finally signed. meeting virtually, leaders from 15 countries and 10 members of the association of southeast asian nations or asean. >> the conclusion of rcep negotiation, the largest free-trade agreement in the world, will send a strong message that supporting the multilateral trading system, creating a new trading structure in the system. >> it is an ambitious deal covering nearly 30% of global economic output and nearly a third of the world population. it aims to lower tariffs in stages. it will provide a simpler tariff framework, meaning businesses will not have to navigate separate requirements to export

to different companies. the u.s., led by president donald trump, pulled out of a trade pact in 2017. that deal, then known as the transpacific partnership, or tpp, would have been the biggest trade deal in the world. analysts say -- >> it does not mean things will change overnight dramatically. but as things unfold in the future, rcep will be one of the platforms that set the terms. china is the largest member and i think that does put china in a very good position for trade in the region. >> this is the first free-trade deal between rival east asian countries china, japan, and south korea. they have not been able to agree on provisions for e-commerce.

it does not include environmental protections or labor standards. it comes into effect once nations ratify the deal domestically. that process could take two years. >> let's bring in guest. in kuala lumpur, we have the founder of the strategic pa n-indo-pacific think tank. in london, senior economist at capital economics where he specializes in emerging markets and asian economies. joining us from washington, d.c., resident scholar at the american enterprise institute. welcome to you all. china is clearly the biggest economy in this grouping. why is china so in favor of

that? >> the headlines all over the world seems to be echoing the belief that china will be benefiting from this agreement because it is the largest free-trade agreement ever. it comprises 30% of all the gdp in the world. having said so, china is an economy that is also trying to carefully navigate its way into the future in light of the pandemic. in spite of what we have seen in pfizer and moderna, where the vaccine has an efficiency rate of more than 92%-94%. so, china is actually very

secure and safe in its own cocoon. however, china is a country that relies on globalization, to benefit from all the benefits of free trade, if i may put it that way. china could gain from it. whether china's leadership had agreed on october 29, just a month ago, they have basically come out with a five year plan to steer china into an economy that could provide high-quality growth.

at the back of the mind of all the decision-makers and economic planners in china, they have 100 smart city plans already in the works. if we look at it in the context of what we have achieved today across the region, which is rcep , we could conclude that we are either a few steps behind china, because china has already come up with plans to steer its economy forward. and it has also gone beyond deregulation. rcep is something that focuses on the old economy. electronic commerce was not given significant emphasis.

>> let me bring in the others. gareth, what do you think china's priorities will be? is it more political than economic? >> i think it is more political than economic. this trade deal has generated a lot of excitement coming on the back of the trade war. all of these countries, or most of these countries trade quite free with each other anyway. they are basically going to lower tariffs from water very low levels. the economic benefits will be quite small. it is not one of these new age trade deals like the tpp, which focused a lot more on nontariff barriers. it is allowing china to cast itself as a champion of globalization. kind of take over the role from the u.s. in east asia. as a political thing from

china's perspective. anchor: the transpacific partnership, which the u.s. intended to be a part of but president trump -- president trump quit it. would president biden try to renegotiate access to the tpp? >> i would hope so. the narrative here in american politics over the past five, six years, the vote for soon-to-be former president donald trump is an expression in part of discontent about globalization. i think that has made politicians a little more hesitant to support new free-trade agreements. president-elect biden has said that he would not out of the gate start go shooting new trade agreements. that said, we have seen a rise

in concern about china's role in the world. so if, tpp could be framed as really an instrument to increase power in the region, then i think it is more politically palatable. just like this agreement, the tpp agreement, i would hope that president biden would push for the u.s. rejoining -- regardless of the political context, politically crucial. anchor: gareth was also saying that already tariffs are very low between these countries on many goods. how important is it to bring

different cultures and economies, from his hollande to laos -- from new zealand to laos, for example, together. >> that is a good question. i agree that the benefits are very low. research has been done on one countries can gain out of rcep, even when the old agreement is ratified. the benefits of the gdp will only accrue more -- a little less than 3.2% for each member state. it is more political rather than economic. having said so, this is one of the most difficult agreements to come up with. earlier, it took eight years to reach this stage.

the association of southeast asian nations, or asean, began the process of negotiating a free-trade agreement with china back in 2002. had only agreed in 2010. that process took eight years. then, two years later, countries, especially china, japan, and korea, decided to expand the size of the free-trade area which we now refer to as rcep. >> one significant aspect of this agreement is on the rules of origin. very quickly, let people understand what rules mean and how that would benefit trade in

this new group. >> i think this is the only nontariff benefit you would receive from this. if a good or component is imported from one country to another, it facilitates this trade. it should make it a lot easier to establish the kind of supply chain network sisi in china across the -- supply chain networks you see in china across the region. a lot of these tariff reductions will happen over a number of years. they are also missing out the agriculture sector entirely. it will not provide a short-term stimulus or short term boost. >> for the u.s. economy, u.s. exporters, origin agreement for this new grouping, is it

something they should be bothered about? >> i don't think u.s. exporters will be bothered about this as much. they are potentially missing out on the fastest growing market in the world. also as a way to boost export markets. to withdraw would be a real hammer blow to them. it will be interesting to see what biden wants to do, to potentially renegotiate a u.s. deal. i assume there are no appetites in congress for further free-trade deals. >> do you think u.s. exporters will suffer because of this new agreement? >> i think i agree with gareth. you have two effects from these regional groupings.

obviously, there is a little bit of divergence, third countries outside of the grouping. i think there is a bit of disappointment on how this trade agreement does not extend beyond sort of your traditional tariff reductions toward things like labor market and environmental regulations. i think it is important to keep in mind that it also cuts both ways. if you have a deeper agreement that presumably facilitates the more efficient facilitation of capital. the way that workers were treated. the more countries there are, the greater potential in ames --

in gains from trade. you have potentially large benefits from free exchange when countries start from relatively different positions in terms of the regulation and differences. we saw that in the renegotiation of nafta here. there is a tendency to try and impose all of your domestic rules on other countries. that is not always the way to go. anchor: china and japan already do not have any sorts of free-trade agreement. tokyo is wearing off china's growing military power. how is japan benefiting from this? >> the japanese economy was doing very well prior to the pandemic because it was heading

towards the tokyo 2020 olympics. but, having seen the effects of the pandemic, the impact is very galling. tourism going into japan is dropped by an earth shattering percentage. if the question is on how japan can handle china's large footprint, i think japan would still cling on in the united states, hoping that the transpacific partnership agreement would be brought back by president-elect joe biden right now. to exceed what rcep can provide to japan.

>> beijing as slapped restrictions of some sort or another on shellfish, wine, beef, barley. can australia benefit from this? is there a way for it to diversify from china? >> potentially, if they could sell more to other markets in asia, those goods that china slapped tariffs on. this deal could make it harder to impose measures. i think the key point to pair in mind, the goods have been subject to tariffs, they are actually a small deal. if, for example, china started

to impose duties on australian iron ore, which is the big thing that australia sells to china. china is very dependent on imports of iron ore. i think that is the kind of key points to bear in mind. these measures would be quite small. it would be harder to introduce if this new agreement does have the teeth. >> if we look at global trade, i will tell you what singapore's prime minister remarked. he said multilateral is a is closing ground. connected supply chains and closer interdependence. the trump administration took the opposite view as at the u.k. with brexit. who will be on the right side of this argument? >> i think the trump

administration's policies have not accomplished a ton and in some ways have backfired. the trump administration did not succeed in isolating china or getting it to make direct bilateral concessions beyond purchases of soybeans, which i think is the grand geopolitical interest that the likes of steve bannon used to tout. in the u.s., support for higher levels of immigration going up. trade has become more popular, too. the -- it has become more regional. i think it is good to see -- i think the biden administration, putting china aside for a moment, will surely return to,

at least in terms of process, more multilateralism if not full embrace of trade agreements. i do think we have seen some pushback. it is very difficult to argue that the brexit process. i think the u.k. is performing worse macro economically than pretty much any country in europe. it has been five years now that they still have not been able to sign new trade agreements with their new trading partners. that move away from globalization, multilateralism, free-trade. at least some room for immigration flows. i think that has really failed and shown to be a bit of a scam. >> kim beng, do you think this

is a shot in the arm for multilateralism? there is less emphasis on labor rights, environmental, and intellectual property protection. >> first of all, this is only the beginning of the journey, a very complex and difficult journey. the rcep agreement is 510 pages with a lot of annexes. when an agreement has a lot of annexes, it does not bode well, to be frank. as a malaysian, they said that this will open up the regional economy for malaysia. personally, i disagree completely. i think he is on the wrong side of understanding the agreement because, first of all, six asean

countries out of town would have to ratify the agreement over the next 10 years. and then another 10 out of 15 from the full framework would have to ratify them further. that includes australia. there were a lot of hoops to jump through over the next two years. there is one little point that i would like to add, which might u.k. colleague has mentioned. maybe people who are very enmeshed and involved in trade will feel very happy because the rules say that anything within the threshold of 40% would qualify for a tariff-free threshold to export or sell their goods into another

country. anything that is sourced from another region that are not part of rcep, going as far as 60%, with still qualify. maybe that is the reason for the exuberance and the joy. but personally, i don't think this is a good agreement. >> gareth, very quickly from you , is this a good sign that multilateralism is the future? >> i think it is a step in the right direction. it does show that outside the u.s. and the u.k. that most countries remain keen on free-trade and closer agreements. i think the benefits, free-trade agreements of the world are quite small. i would not get too carried away by ed. -- by it. >> thank you to our guests.

and thank you for watching. you can see the program anytime. the facebook page, facebook.com/ajinsidestory. join the conversation on twitter, @ajinsidestory. for me, bernard smith, and the entire team here, goodbye for now. ♪

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