Fifteen countries, including China, signed a major trade deal this week known as the Regional Comprehensive Economic Partnership (RCEP). What began as a harmonizing of agreements between members of the Association of Southeast Asian Nations, or Asean, has turned into potentially the world’s biggest free trade bloc. As a result, it would lower tariffs and other barriers to the trade of goods amongst the participating countries; including China, Japan, South Korea, Australia, New Zealand and 10 Southeast Asian nations, from Indonesia and Vietnam to Thailand and Singapore. The deal marks the first time rival East Asian powers China, Japan and South Korea have been in a single free trade agreement.

The United States and India are not part of RCEP currently in an effort to protect their respective countries on varying levels. Unlike other trade deals, the RCEP doesn’t require its members to take steps to liberalize their economies and protect labor rights, environmental standards and intellectual property. U.S. Commerce Secretary Wilbur Ross has called it a “very low-grade treaty,” however, RCEP’s imminent implementation could make it harder for U.S. businesses to compete in the vast region.

Although most countries that are part of the deal already have tight trade ties—they rely on one another for a wide range of goods—their new agreement is considered significant because it will result in a more unified trading system. That should make it easier for the region’s manufacturers to import raw materials from the bloc without facing high tariffs, and export finished products throughout the region with lower tariffs.

According to Japan’s government, the RCEP will eliminate tariffs on 91% of goods among members. It will slice trade barriers with many of Japan’s largest trading partners, raising the level of nontariff items sent to South Korea to 92% from 19%, and to China to 86% from 8%. Officials said they expect the agreement will help countries better fight the economic hit from the pandemic.

The U.S. hasn’t been deliberately excluded from the RCEP. To join, it would first need to reach a free-trade arrangement with Asean, then apply to join.

Sources: Wall Street Journal, AJOT, CNBC