The deal, expected to be signed on the sidelines of a mostly online ASEAN summit in Hanoi, will take years to complete but will progressively lower tariffs across many areas and could become the world’s biggest trade agreement.
Southeast Asian leaders are set to meet on Thursday and are expected to lead to an ambitious China-backed trade deal at a time the still uncertain election result in the United States leaves questions over its engagement in the region.
Leaders of the 10-member Association of South East Asian Nations (ASEAN), China, Japan, South Korea, Australia and New Zealand are scheduled to conclude talks on the Regional Comprehensive Economic Partnership (RCEP) this Sunday.
The deal, which is expected to be signed later on Sunday on the sidelines of a mostly online, four-day ASEAN summit in Hanoi, will take years to complete but will progressively lower tariffs across many areas and could become the world's biggest trade agreement.
The 15 participating RCEP countries make up nearly a third of the world's people and account for 29 percent of global gross domestic product. China is already the biggest source of imports and destination for exports for would-be RCEP members.
"The signing of RCEP will provide momentum for regional trade, particularly between signatories," said Nguyen Quoc Dung, deputy foreign minister of Vietnam, which is chairing ASEAN meetings this year.
Uncertainty regarding US participation
The summit comes while the result of the US presidential election has yet to be declared despite Democrat Joe Biden projected to have comfortably won the 270 electoral votes needed for victory.
While Biden, set to take office on Jan 20, is not expected to make major changes to Washington's tough stance on China-led investment, bankers and lawyers believe policy and regulatory stability could return following four turbulent years of the Trump administration.
Biden, who was vice president during President Barack Obama's "Asian pivot", is expected to steer away from Trump's "America First" agenda and re-engage more actively in the region.
Most significant ASEAN agreement
But legal challenges to the election result and the firing of the US defence secretary by Trump risk raising concerns among US allies at a time that China's influence is growing.
Trump's tariff-raising trade war with China has given extra impetus in recent years to push ahead with the RCEP, which had otherwise progressed only sluggishly since negotiations began in 2012.
The deal, which is expected to be the most significant agreement at this year's ASEAN summit, will likely cement China's position more firmly as an economic partner with Southeast Asia, Japan and Korea, and put it in a better position to shape the region's trade rules.
"The uncertainty regarding the US election raises questions regarding US participation in relevant meetings and may give China a chance to influence the narrative about America's engagement with the region," said Le Hong Hiep, a fellow at Singapore’s ISEAS Yusof Ishak Institute.