The Regional Comprehensive Economic Partnership (RCEP) free trade agreement, which entered into force on Jan. 1, 2022, will provide a new boost to long-term regional economic growth, experts said on Wednesday.
RCEP comprises 15 Asia-Pacific countries including 10 members of ASEAN (the Association of Southeast Asian Nations), namely Brunei, Cambodia, Indonesia, Laos, Malaysia , Myanmar, the Philippines, Singapore, Thailand and Vietnam, and five trading partners, namely China, Japan, South Korea, Australia and New Zealand.
“We expect the RCEP agreement to have an overall positive impact on the medium to long-term economic growth of ASEAN+3 (China, Japan and South Korea) and the rest of the bloc, with three potential benefits of its main provisions,” Hoe Ee Khor, chief economist of the ASEAN+3 Macroeconomic Research Office (AMRO), told Xinhua in an email.
He said the first benefit would come from the elimination of tariffs on more than 90% of goods traded within the bloc over the next two decades.
The second benefit would come from the efficiencies of a set of consolidated trade rules and harmonized and more accommodating rules of origin, which will allow multinational enterprises to take advantage of the comparative advantages of the different ASEAN + 3 economies to reduce their production costs, Khor said.
The third benefit is RCEP’s potential boost to cross-border trade in services through further liberalization of certain sectors such as telecommunications and financial services, as well as provisions on easier labor mobility. and on e-commerce and digital commerce, he added.
“At the country level, individual ASEAN+3 economies will reap different benefits, and in different ways,” he said. “RCEP’s tariff cuts, for example, will primarily benefit the Plus 3 economies (China, Japan, and South Korea).”
Khor said ASEAN would benefit from immediate efficiencies and reduced production costs from RCEP’s consolidated set of rules on trade and customs practices.
“ASEAN economies are also expected to benefit from higher investment flows through the expansion of regional supply chains within the bloc in the medium term,” he said.
Kin Phea, director general of the Institute of International Relations of the Royal Academy of Cambodia, said that RCEP is a multilateral business cooperation and its structure is truly meant to benefit all participating countries, as all will be governed by the same trading rules.
“RCEP is Asia’s most ambitious regional free trade agreement in which China has played a vital role in converting the Asian economy into a central economic hub aimed at avoiding protectionism and the widespread negative impacts of trade war,” he told Xinhua.
“This mega-regional trade pact is key to reversing rampant unilateralism as it brings together all bilateral free trade agreements into one economic sphere, under one overarching trade decision,” Phea added.
Senior Economist Ky Sereyvath, director general of the Institute of Chinese Studies at the Royal Academy of Cambodia, said RCEP has served as a catalyst for regional and global economic growth.
“I believe this trade pact will become a new center of gravity for global trade in the future,” he said.