The Regional Comprehensive Economic Partnership (RCEP) agreement is expected to take effect on Jan. 1, 2022. Being the world’s biggest trade pact, it is considered a massive coup for regional economic integration, multilateralism and free trade.
Signed by 15 Asia-Pacific countries in 2020, the RCEP covers a market of 2.2 billion people, or almost 30 percent of the world’s population, with a combined gross domestic product (GDP) of 26.2 trillion U.S. dollars or about 30 percent of global GDP.
CONFIDENCE BOOSTS GLOBALIZATION
In recent years, trade protectionism has emerged and even been intensified in the wake of the COVID-19 pandemic, posing severe challenges to economic globalization and recovery.
The scheduled entry into force of the RCEP is not only an important achievement of multilateral cooperation, but also a historic step forward in economic globalization.
According to an analysis of the United Nations Conference on Trade and Development (UNCTAD), the economic size of the RCEP and its trade dynamism will “make it a center of gravity for global trade.”
The RCEP is not only the largest free trade agreement, but also a comprehensive, modern and high-quality one. It covers not only trade in goods, but also trade in services, investment, technology, intellectual property rights and e-commerce.
In the eyes of Stephen Perry, chairman of Britain’s 48 Group Club, the RCEP is “a historical inevitability that there will be three regions cooperating in the world,” namely the Asia Pacific, North America and Europe.
After RCEP comes into effect, developing and least developed economies in the region will receive greater economic and technical aid, bridging the developing gap between its members and promoting more inclusive development.
Liu Ziyang, a professor at Kyonggi University in South Korea, said the pact’s entry into force will “boost confidence in regional and global trade, promote the integration of regional industrial chains and safeguard free trade and multilateral mechanisms.”
“VIBRANT DYNAMISM” IN REGION
For RCEP members, a series of substantial benefits, such as tariff reductions, trade facilitation and circulation of economic elements, will build a more cohesive platform for regional cooperation.
According to estimates from the Japanese government, the RCEP can make 91.5 percent of Japan’s industrial goods become duty-free, boost Japan’s GDP by 2.7 percent and create 570,000 jobs, generating more economic benefits than any trade agreement Japan has signed to date.
The day the RCEP kicks in, Cambodia will officially assume the rotating presidency of the Association of Southeast Asian Nations (ASEAN). According to the Cambodian Ministry of Commerce, the regional agreement can increase Cambodia’s export and investment by 7.3 percent and 23.4 percent respectively, let alone offer its agricultural and industrial products preferential tariffs.
A series of new regulations and mechanisms will enable a more efficient and smooth flow of regional production resources, improving the current global supply chain.
William Jones, Washington bureau chief of the U.S. publication Executive Intelligence Review, believed that the increase in trade and investment brought about by the RCEP will “help to repair the supply chains disrupted by the COVID pandemic.”
“I see the potential of the RCEP becoming an Asia Pacific super supply chain,” said Professor Lawrence Loh, director of the Center for Governance and Sustainability at National University of Singapore. The world will benefit from the “vibrant dynamism of the region.”
The implementation of the RCEP echoes the call of the times to build an open world economy, and China’s expanded opening-up will not only further promote its own development, but also benefit other RCEP countries.
After the RCEP takes effect, nearly 30 percent of China’s exports will receive zero-tariff treatment, and access conditions for service trade and investment will also be improved, said Liang Guoyong, a senior economist with UNCTAD.
In the eyes of Professor Tu Xinquan, dean of the China Institute for WTO Studies, University of International Business and Economics, the RCEP is significant for China to build a “dual circulation” development paradigm.
Since many RCEP members are China’s close neighbors and major economic partners, it is particularly important to strengthen economic and trade relations with them to consolidate the first layer of the international circulation, Tu said. Enditem