Asia-Pacific Nations Ink World's Biggest Trade Deal, And The U.S. Isn't Part Of It

Asia-Pacific nations signed the world's biggest trade deal on Sunday.

What Happened: Fifteen nations signed the Regional Comprehensive Economic Partnership. They represent a third of the world's population and gross domestic product.

The agreement took place at a summit held virtually amid the pandemic. 

The signatory nations are: Australia, China, Japan, South Korea and New Zealand; and the 10 members of the Association of Southeast Asian Nations, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

It still must be ratified by the signing states before it can take effect. This is no formality -- many trade deals have foundered on these rocks before.

Why It's Important: Geopolitically, RCEP is viewed as China's counterpoint to the Trans-Pacific Partnership, a deal pushed by former U.S. President Barack Obama but that U.S. President Donald Trump pulled his country out of in 2017.

TPP from the outset did not include China. By boxing-out Beijing, it aimed to diminish China's economic influence and came as Obama sought to "pivot" U.S. focus toward Asia and away from the Middle East.

India pulled out of RCEP a year ago. This year, at least 20 of its troops were killed in Himalayan border clashes with China.

What's Next: The Pacific trade deal will be among the many items sitting on President-elect Joe Biden's desk for his first day on the job. The U.S. could rejoin the pact (now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership), but in the years since Biden left Obama's White House, the U.S. has moved away from its embrace of free trade deals. Biden is reportedly not keen to revive Washington's participation in the deal.

But the U.S. also has in that time grown more wary of China. U.S. allies like Australia, Japan and South Korea have too, but they nonetheless signed RCEP on Sunday.

The geopolitical force of this could push Biden to take a fresh look in the early days of his presidency.