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RCEP: An important milestone in East Asia's economic integration

The Regional Comprehensive Economic Partnership (RCEP) agreement was signed among the 15 participating countries during the signing ceremony held via video conference in Hanoi, capital of Vietnam on Nov. 15, 2020, adding an important milestone in the construction of East Asia Free Trade Area, featuring the largest population, the most pluralized member structure and the greatest development potential in the world.

RCEP: An important milestone in East Asia's economic integration

The signing ceremony of the Regional Comprehensive Economic Partnership (RCEP) agreement via video, Nov. 15, 2020. (Source: Xinhua)

Members of RCEP

RCEP was initiated by ten ASEAN countries, namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, and the bloc’s six FTA partners of Australia, China, Japan, New Zealand, South Korea and India. However, India opts out of RCEP on 4 November 2019 in ASEAN+3 summit, citing, according to its view, the adverse impact the deal would have on its citizens.

The 15 member countries of RCEP account for around 30 percent of the global population, global gross domestic product and 28 percent of global trade, which has made RCEP the world’s biggest free trade bloc. With the signing of the RCEP, China’s external trade environment is expected to be greatly improved, the investment and labor between China and RCEP members strongly promoted, and new energy constantly provided for China’s economic growth.

Basic concepts of RCEP

With the phenomena of de-globalization, unilateralism and trade protectionism are becoming more and more obvious. Some developed countries have adopted various trade restriction measures to strengthen local market protection, which has had a strong impact on the international trade, dragging down the economic growth of Asian economies.

In response to that, RCEP will further eliminate the regional trade barriers in Asia, promote a unified and stable production and consumption market in Asia, and create a positive effect on other regional and multilateral free trade arrangements in Asia and even the world.

Contents of RCEP

The agreement aims to reduce tariffs and red tape, including unified rules of origin throughout the bloc, which may help to facilitate international supply chains and trade within the region. It also prohibits certain tariffs, without focusing on labor unions, environmental protection, or government subsidies only. Worth noticing, the RCEP will eliminate as much as 90% of tariffs on imports between signatory nations within the next 20 years.

Positive significance and influence of RCEP

As Chinese Premier Li Keqiang pointed out, the signing of the deal is “a victory of multilateralism and free trade”. According to Li, the positive significance and influence of RCEP can be summed up as follows.

“The RCEP will help realize a high-level opening-up for trade in goods and services, as well as investments, among regional countries, greatly lift the level of regional trade and investment liberalization and facilitation, and strengthen the attractiveness and competitiveness of the region”, Li said in his speech.

“The RCEP was signed at a time when the COVID-19 pandemic is still raging across the globe, and the world economy is in a deep recession with contracted global trade and investment and rising protectionism and unilateralism,” Li stressed, “the signing of the RCEP shines light and hope through dark clouds under the current international situation, showing that multilateralism and free trade are the right way forward, and remain the right direction for promoting the growth of the world economy and the progress of humanity.”

“The RCEP allows people to choose solidarity and cooperation when facing challenges, instead of resorting to conflict and confrontation, and to choose mutual assistance and support, rather than follow a beggar-thy-neighbor approach or sit by and do nothing,” Li added.

[ Editor: WXY ]