RCEP to boost Asia-Pacific growth
Regional trade pact to promote resilience, greater economic integration, experts say
The Regional Comprehensive Economic Partnership is set to accelerate regional economic integration, inject more growth impetus into the world’s economic recovery and shore up multilateralism and free trade, experts said on Jan 23.
They made the remarks at the RCEP Media & Think Tank Roundtable Forum with the theme of “The RCEP comes into effect: New prospects for regional cooperation and development”.
The forum was jointly organized by the Publicity Department of the Communist Party of China Hainan Provincial Committee, China Daily, the Hainan-based China Institute for Reform and Development, and the Hainan Institute for Free Trade Port Studies.
The agreement came into force on Jan 1 in 10 of the 15 RCEP member states. The world’s biggest trade pact, it covers one third of the global population and domestic gross product and will add more resilience to regional industrial and supply chains, the experts said.
While speaking at the opening ceremony of the event, Zhou Shuchun, publisher and editor-in-chief of China Daily, said a unified regional market will unleash the huge potential of trade growth in the region. It will also vigorously promote regional economic integration of a higher quality and at a deeper level, and strengthen the presence of the Asia-Pacific region in the global economic and trade arena, he added.
The trade pact’s implementation is a testimony to true multilateralism and free trade, which also indicate a future of mutually beneficial cooperation with opening-up practices and win-win outcomes, Zhou said.
“Removing wall-like barriers instead of building more is the trend of history, and it is in line with interests of people in the world to firmly support a multilateral trading system,” he said.
The free trade agreement was signed by 15 Asia-Pacific countries, including all 10 member states of the Association of Southeast Asian Nations, in November 2020. It came into effect in China, Japan, Australia, New Zealand and six ASEAN states — Brunei, Cambodia, Laos, Singapore, Thailand and Vietnam — at the start of the year. South Korea will enter the partnership on Feb 1, according to a statement released by the ASEAN Secretariat this month.
Cost cuts
With provisions on liberalization and facilitation in both trade and investment, it is widely expected the pact will provide an all-around boost to regional economic growth and global free trade.
Hong Nanwei, general manager of Fujian Chuangxing Ocean Sci-Tech Co Ltd, a frozen seafood processor and exporter in Quanzhou, Fujian province, said that thanks to reductions and removals of tariffs in the pact, the company is more confident of better growth in overseas markets.
Chi Fulin, president of the China Institute for Reform and Development, said tariffs on about 90 percent of goods traded within the region will eventually be eliminated and significantly reduce trade costs and product prices.
The cumulative rules of origin, which allow products to have just 40 percent of their value added within the region to enjoy tariff reduction or elimination, will encourage enterprises to source from the region. That will then promote the formation of a closer, more stable and more competitive regional industrial cooperation system, according to Chi, who is also president of the Hainan Institute for Free Trade Port Studies.
Chen Geng, chairman of FashionFlying Group, a large-scale outdoor garment manufacturer based in Fuzhou, Fujian province, said the RCEP agreement will help the company to tap the potential of Southeast Asian markets.
Citing a study by the Asian Development Bank, Bert Hofman, director of the East Asian Institute at the National University of Singapore, said the pact will increase member economies’ income by more than half a percent by 2030, adding some $245 billion in annual income and 2.8 million jobs in the region.
“It is important for mankind to work together and to benefit from globalization and to benefit from high standards in trade,” Hofman said.
Chi suggested member economies strengthen efforts to accelerate alignment of market regulations and share and recognize customs clearance information to accelerate the formation of a united regional market. Efforts are also needed to advance the construction of integrated markets in key areas such as agricultural products, services and the digital economy, he said.
Ong Tee Keat, president of the Malaysian think tank Center for New Inclusive Asia, and also Malaysia’s former minister of transport, said the regional free trade deal can serve as a building block for multilateralism in the future.
However, while the huge free trade deal is expected to deepen regional economic integration by broadening common combined rules of origin in the coming years, it is vital for members to further remove traderestrictive measures and create more opportunities for companies to invest within the bloc, said Li Mingjiang, associate professor at the S. Rajaratnam School of International Studies at Nanyang Technological University in Singapore.
Support mechanisms
RCEP member economies have been urged to take practical intergovernmental coordination measures to build advanced investment platforms and supply and service chains to reinforce regional economic integration, the experts said.
“In terms of resolving internal issues, RCEP members can learn from the experiences and measures in the early stages of the European Union, such as establishing a fund to help less-developed members better adapt to the new situation as quickly as possible,” said Zhao Jinping, former director-general of the department of foreign economic relations at the Development Research Center of the State Council, China’s Cabinet, in Beijing.
According to information released by the Ministry of Commerce, the RCEP is expected to expand signatories’ market access for investment, harmonize rules and regulations and strengthen supply chains within the free trade zone.
Zhao said high-income countries such as Japan and Australia, along with large emerging market economies like China, Indonesia and Malaysia, could offer inclusive support to low-income economies such as Myanmar, Laos and Cambodia to help them make various transitional arrangements to stabilize their economies and export businesses and help them adapt to the changes brought by the RCEP.
Herizal Hazri, executive director of the Malaysian Institute of Strategic and International Studies, said policymakers from different countries should introduce flexible measures to enable small and medium-sized enterprises to enjoy more trade facilitation policies and enhance their global competitiveness by the use of new market access commitments and streamlined, modern rules and disciplines that facilitate trade and investment.
Huo Jianguo, vice-chairman of the China Society for World Trade Organization Studies in Beijing, said companies in RCEP economies should continue to invest in areas of industrial and supply chain cooperation because the flexible cumulative rules of origin will bring tangible benefits to the logistics and service sectors.
In addition to significantly lowering trade and investment barriers, he said the RCEP will also integrate the industrial, supply and value chains of China, Japan and South Korea thanks to more flexible cumulative rules of origin.
Jiang Ruiping, professor and former vice-president of the China Foreign Affairs University in Beijing, said: “The three economies have been working for a long time to form a free trade bloc.
They have come close to their objective through the RCEP. It will create preferential access to each other’s markets and help them expand investments, share technologies and promote fresh industrial and supply chains.”