Regional Comprehensive Economic Partnership (Rcep) Agreement

3:13 pm Uncategorized

The main effect of the RCEP is to have pooled the various free trade agreements concluded by ASEAN with the other five Asia-Pacific countries in a single framework. It covers trade in goods, but contributes little to the removal of non-tariff barriers. Most services are excluded, but also agriculture, which is a sensitive sector. This is a more “flat” agreement than the existing free trade agreements between the EU and the region. And that cannot be compared to our own internal market. But that was never the case. The impact of the RCEP is impressive, even if the agreement is not as strict as the CPTPP. It stimulates supply chains throughout the region, as well as political sensitivities. Its intellectual property rules have little effect on what many members have, and the agreement says nothing at all about labour, the environment or state-owned enterprises – all key chapters of the CPTPP.

However, ASEAN-focused trade agreements tend to improve over time. The RCEP is not as comprehensive as the comprehensive and progressive agreement for the Trans-Pacific Partnership, another free trade agreement in the region that encompasses some of the same countries. [9] The RCEP “does not establish uniform employment and environmental standards or require countries to open services and other vulnerable areas of their economies.” [16] On 15 November 2020, 15 countries – members of the Association of Southeast Asian Nations (ASEAN) and 5 regional partners – signed the Comprehensive Regional Economic Partnership (RCEP), probably the largest free trade agreement in history. The RCEP and the 2018 Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) agreement, also dominated by East Asian members, are the only major multilateral free trade agreements signed during the Trump era. The RCEP, often imprecisely described as “china-led,” is a triumph of ASEAN`s diplomacy of middle power. The value of a major East Asian trade agreement has long been recognized, but neither China nor Japan, the region`s largest economies, have been politically acceptable as architects for the project. The impasse was resolved in 2012 by an ASEAN-brokered agreement, which included India, Australia and New Zealand as members and tasked ASEAN with negotiating the agreement. Without such an “ASEAN centrality,” the RCEP would never have been created.

Of course, the RCEP is not a comprehensive free trade agreement. It codifies the removal of tariffs, particularly for items already exempted under other free trade agreements, and presents a large vacuum in which countries can maintain tariffs in a wide range of sectors; it will not lead to a massive increase in intra-regional trade in the short term. (An analysis by the Peterson Institute suggests that rcep would boost global trade by $500 billion over the next ten years.) Nevertheless, its provisions should help North-East Asian multinationals to establish more fluid supply chains throughout the RCEP block and, in general, to more closely connect the economies of Northeast Asia and Southeast Asia. This should help Southeast Asian countries such as Vietnam, Thailand and Malaysia, which have already attracted increasing investment, as multinationals relocate some operations from China because they are increasingly concerned about the trade battle between the United States and China and Beijing, increasingly severe restrictions on some foreign companies.

Comments are closed.