Regional trade pact pays early dividends
RCEP gains felt already as Asia-Pacific economies tighten links, experts say
The world’s largest free-trade pact is gradually transforming economies in the Asia-Pacific region by opening up huge export markets and strengthening supply chains, analysts say.
The Regional Comprehensive Economic Partnership, or RCEP, which was signed by 15 countries and took effect in January, is expected to sustain growth in a region rebounding from the pandemic.
The RCEP aims to establish a unified market by reducing tariff and nontariff barriers. The pact’s signatories are the 10 members of the Association of Southeast Asian Nations together with Australia, China, Japan, South Korea, and New Zealand. ASEAN comprises Brunei,
Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
While the RCEP has been in place for only six months, several member countries have already seen how it is freeing up trade.
Hafidzi Razali, a senior analyst for Malaysia at advisory firm Bower Group Asia, said the agreement’s “multifaceted nature” means that the expected benefits will come over the medium to long term.
Malaysia ratified the agreement in March, and with the RCEP opening up more markets for exports, Hafidzi said the Malaysian government should introduce programs that can boost export competitiveness.
Consultancy Dezan Shira & Associates said the RCEP has “great significance for China and for foreign investors”. The trade pact brings huge import-export opportunities for China, encouraging its enterprises to boost exports in which China has comparative advantages, and increase imports of key technologies, components and raw materials, it said.
RCEP will allow China to have a “more stable and solid connection” with Asia-Pacific countries, according to the firm.
China’s trade with other RCEP countries expanded 6.9 percent to 2.86 trillion yuan ($422.7 billion) in the first quarter of this year and accounted for 30.4 percent of China’s total foreign trade value, according to the General Administration of Customs.
Countries benefited
Exports to these countries increased by 11.1 percent, while imports from them rose by 3.2 percent, the data shows.
In Thailand, between January and April, exporters applied for RCEP certificates of origin relating to trade worth $204 million, according to Jurin Laksanawisit, a Thai deputy prime minister and commerce minister.
In the period, the value of goods imported by Thailand utilizing RCEP preferential policies came to $72.3 million.
Thailand exported over 500,000 metric tons of durian to China between Feb 1 and June 17, in trade worth 54.4 billion baht ($1.47 billion). This surpassed the 425,000 tons exported in the same period a year earlier.
Piti Srisangnam, associate professor of economics at Chulalongkorn University in Bangkok, said the RCEP’s aim of easing trade is especially helpful for Thai agricultural exporters. Piti said that allowing their perishable products to pass immigration procedures quickly means fruit exporters can easily ship to markets like China.
Thailand is among the world’s biggest fruit exporters, and China is its top export market.
Kim Sam-soo, director-general of the Korea Trade-Investment Promotion Agency’s Dalian office in Northeast China’s Liaoning province, said the trade deal has brought new opportunities for trade with China.
“After the RCEP became effective, exports of some South Korean companies with production bases in Dalian have increased,” said Kim, adding that an international business district under the RCEP framework was established this year in the Dalian Free Trade Zone.
In New Zealand, Wei Song, chief executive of Yashili New Zealand Dairy, said that after the pact took effect, the certification and customs procedures for exports were “simplified and became more convenient”.