Benefits from the world’s largest trading bloc RCEP after years of negotiations
Before RCEP, a number of participating countries were also affiliated with bilateral free trade agreements, but RCEP can be seen as an integrated framework with existing agreements.
For China and Japan – Asia’s two largest and second largest economies – RCEP is the first free trade agreement to connect them. Taxes on 86% of Japanese goods exported to China will be eliminated. This promises great benefits for Japanese manufacturers, especially auto parts suppliers.
The signing is made in the context that the world economy continues to be influenced by Covid-19. While China, South Korea and Vietnam recovered faster, many Asian countries continued to record economic decline in the third quarter. So, on Sunday (November 15), members expressed hope that RCEP will play a key role in the region’s long-term recovery and prosperity.
|The chart depicts the Asia Pacific regional trade agreements|
“The signing of the RCEP is a timely engine of the region’s long-term prospects. It will be a bright spot pointing to the direction ahead, “Singapore Trade and Industry Minister Chan Chun Sing told reporters on Sunday.
Malaysia’s International Trade and Industry Minister Azmin Ali said in a statement: “Without a doubt, this agreement represents an important and urgent milestone in the process of economic integration and recovery. 15 parties ”.
Philippine Trade Minister Ramon Lopez told reporters on Saturday (November 14) that RCEP “offers broader market opportunities for our exporters and service providers. He added that RCEP countries account for more than 50% of the Philippine export market.
“Trade is an important growth driver for RCEP members,” said Cassey Lee, senior fellow at the Singapore-based ISEAS-Yusof Ishak Research Institute. While the economic recovery will be slow for many countries, the agreement will give signatories more trade and investment opportunities.
“This will put these countries in an advantageous position to leverage and together strengthen their future economic recovery,” Lee said.
For China, the RCEP fits in with President Xi Jinping’s new economic strategy of “dual circulation” – re-focusing on domestic demand while taking advantage of foreign trade and investment.
Chinese officials have pushed for multilateral agreements over the past few months, illustrated by a number of high-level meetings, both virtual and virtual. Beijing also vowed to further open up trade and investment as it aims to become a “high-income country” by 2025 and a moderately developed economy by 2035.
“We will continue to reduce the list of negative barriers to foreign investment access,” Qian Keming, China’s Deputy Minister of Commerce, told a forum on Thursday (November 12).
He also said that multinationals would be encouraged to enter high-tech sectors and development projects in China’s underdeveloped central and western regions.
|The chart shows the size of the RCEP relative to the CPTPP|
Without India, China is the largest RCEP participant to date, both in terms of GDP and population. As a result, China appears poised to wield more influence within the bloc.
“In the beginning, Japan said it didn’t want to sign without India there because the RCEP became too dominant in China without India,” said an ASEAN diplomatic source. But now they join, because there is no choice.
The 15 members officially left the door open for India to join after that. Japanese Prime Minister Yoshihide Suga said at the RCEP meeting on Sunday (November 15) that Japan will play a leading role in the effort to bring the South Asian nation forward.
Indonesian President Joko Widodo said the signing was just the beginning, adding that members still have to work hard to implement the agreement. “This also requires political commitment at the highest level. For Indonesia, we still open opportunities for countries in the region to join this RCEP agreement ”.