Expectations from RCEP

Monday, 2020-11-16 17:27:45
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At the signing ceremony in Hanoi (Photo: VNA)
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NDO – The Regional Comprehensive Economic Partnership (RCEP) was in the spotlight at the 37th ASEAN Summit which was virtually hosted by Vietnam from November 12-15, according to Singapore’s The Strait Times.

The successful signing of the agreement on November 15 following eight years of tough negotiations received a great deal of attention as RCEP is expected to be an important driving force in the promotion of free trade and economic recovery in the region after the pandemic, as well as contributing to helping shape global trade flows.

In their joint statement on the RCEP, leaders stated this was the largest trade pact in the world with the diversity of economies involved. It involves 15 countries, including ASEAN's 10 member states, China, Japan, the Republic of Korea (ROK), Australia, and New Zealand. With a population of 2.2 billion people, accounting for about 30% of the world's population and nearly 30% of global GDP, the signing of the RCEP sent a positive message to the world in favour of the multilateral trade among 15 countries.

The signing of the RCEP took place in the context of economies in the region having been severely damaged by the COVID-19 pandemic. In ASEAN, most economies have fallen into recession with an unprecedented level of decline. Meanwhile, from 2018, protectionism has increased, causing many difficulties in economies in the region. The US-China trade war has persisted while confidence in the multilateral trading system has been at an all-time low. Assessing the context of the signing of the RCEP, Cambodian scholars have said that the fact that the COVID-19 crisis has disrupted the global supply chain became an “impetus” for countries to quickly sign the RCEP.

After many “missed appointments”, the signing of the RCEP by the ASEAN countries and their five partners is expected to act as a "lever" to promote the region's economic recovery in the coming years. During the past week, leaders and experts from RCEP member countries have highly lauded the expected driving force effect it will have on economic growth and the benefits this will bring about.

In reply to the Bernama news agency, Malaysia’s Senior Minister cum International Trade and Industry Minister M. Ali said that the RCEP will promote, facilitate and protect the investment climate of participating countries within the region. He added that this also includes information exchange and promotion of transparency measures to facilitate business and investment within the RCEP area.

The RCEP will not only bring about economic benefits, but also is an affirmation of the foreign economic policy direction of supporting free trade between the countries in the region. For ASEAN in particular, the agreement also contributes to demonstrating the central role of the region in shaping global trade flows. The signing of this agreement is testament to the strengthening of the multilateral trading system.

ROK scholars believe that the RCEP will reinforce the achievements of the ROK’s New Southern Policy by helping remove trade barriers between ASEAN countries and the ROK. Australian Minister for Trade, Tourism and Investment Simon Birmingham recently emphasised the importance of the RCEP. “It’s symbolically quite a significant agreement, coming at a time of global trade uncertainty,” he told local media. “It says in a really powerful and tangible way that our region, which has been the driver of global economic growth, is still committed to the principles of trade, openness and ambition”.

As a result, after an arduous journey, the RCEP “ship” is now “sailing smoothly” to its destination. The RCEP will have a period of two years from the date of the agreement's signing to elaborate upon its terms before it officially takes effect. Therefore, now is the time for the government and the business community of each member country to focus on preparing to “harvest” as much as possible from this agreement.