RCEP-the world’s largest free trade agreement will come into force on January 1 next year

RCEP1

The Governments of New Zealand and Australia announced on Wednesday that the two countries have completed domestic ratification procedures for the Regional Comprehensive Economic Partnership (RCEP). This marks that the “milestone” conditions for the RCEP to come into force have been met.

RCEP’s main features:

First, the scale is large. The RCEP is a free trade area with the largest population, largest economy, most diverse membership structure and the greatest development potential in the world, covering about 30 percent of the world’s population, 30 percent of economic aggregate and 30 percent of foreign trade.

Second, RCEP is more open than the WTO. Within the RCEP framework, China, Japan and the ROK have reached a breakthrough agreement on free trade.

Third, there is a foundation. RCEP is integrated and upgraded on the basis of the 10+1 FREE trade agreements implemented by ASEAN with China, Japan, the REPUBLIC of Korea, Australia and New Zealand respectively, and has a corresponding free trade foundation. The 10+1 strategic partnerships in the region have promoted a series of bilateral cooperation in the past decade and more.

Fourth, ASEAN leadership. East Asian Characteristics – ASEAN, mainly composed of developing countries, initiated and led RCEP.

Fifth, after eight years of negotiations, the RCEP has been fully prepared for the changes brought about by the opening of the market.

Sixth, RCEP countries enjoy close trade and investment relations and strong industrial complementarity. The building of RCEP will not only facilitate trade expansion and mutual investment among RCEP member states, which will generate more trade creation, but also help RCEP member states attract more investment from enterprises outside the region.

Seventh, there is a growing demand for cooperation. There is a growing need for RCEP countries to work together to tap regional development potential, to cope with years of sluggish world economic growth and the current severe downturn, and to cope with international trade protectionism.

Later said in a news release that the Ministry of Commerce of China 3, on November 2, RCEP custodian institution asean secretariat, notice, announcement of brunei, Cambodia, Laos, six asean member countries such as Singapore, Thailand, Vietnam and China, Japan, New Zealand, Australia and other four asean members have asean secretary-general formally submitted for approval, to reach agreement. According to the agreement, RCEP will enter into force for these ten countries on January 1, 2022.

The RCEP negotiation was launched in 2012 by the 10 ASEAN countries and invited six dialogue partners – Australia, China, India, Japan, the REPUBLIC of Korea and New Zealand – to participate. The third RCEP Leaders’ Meeting was held in Bangkok, Thailand, in November 2019 and a joint statement was issued, announcing the conclusion of all text negotiations and virtually all market access negotiations by 15 countries except India. In November 2020, 15 RCEP member states formally signed the agreement. According to the agreement, after ratification by six ASEAN member states and three non-ASEAN member states, RCEP will become effective among those countries that have ratified it.

On March 22, the head of the International Affairs Department of the Ministry of Commerce of China said that China has completed the ratification of the RCEP agreement, becoming the first country to do so. On April 15, China formally deposited the RCEP approval document with the ASEAN Secretary-General, marking the formal completion of the RCEP approval process. On April 28, the Plenary session of the Japanese Senate approved THE RCEP.

The Ministry of Trade of New Zealand issued a statement on The 3rd, announcing that the country has approved RCEP, “from the beginning of next year, businesses will be able to take advantage of RCEP opportunities”. The Australian Department of Foreign Affairs and Trade also issued a statement saying RCEP will come into force on January 1, as Australia and New Zealand have completed ratification procedures for the agreement. “RCEP will enter into force 60 days after ratification by at least six ASEAN countries and at least three non-ASEAN countries. This milestone (condition) was reached on 2 November 2021 with the ratification of RCEP by Australia and New Zealand, paving the way for it to enter into force on 1 January 2022.” “Australia has ratified RCEP, ensuring our farmers and businesses can benefit from the world’s largest free trade agreement,” the statement said.

Japan’s Kyodo News agency said on Wednesday that despite the absence of the US, RCEP is still the largest free trade agreement in the world, and “it will also be the first trade agreement involving China and South Korea that Japan has joined”. The Japanese government estimates that RCEP could boost Japan’s gross domestic product by about 2.7 percent. RCEP aims to remove 91 percent of tariffs on goods between member countries and standardize trade rules on investment, intellectual property and e-commerce, the report said.

“The world’s largest trade agreement will take effect in January next year without the United States,” CNBC said on Its website on Wednesday. RCEP covers 2.2 billion people and a global output market worth 26.2 trillion dollars. The partnership will create a trading bloc covering about 30 per cent of the world’s population and the global economy, which is larger than other regional trade blocs such as the US-Mexico-Canada agreement (USMCA) and the European Union. Analysts say the economic benefits of RCEP are small and will take years to materialize, the report added sourly. “Still, the deal is widely seen as a geopolitical victory for China at a time when US economic influence in the Asia-Pacific region is waning.”

The Nikkei Asian Review said Wednesday that RCEP will create a super-large trade bloc covering about 30% of the world’s GDP and population. Once in force, the pact will eliminate tariffs on about 90 percent of goods traded between signatory countries over the next 20 years. For companies around the world, RCEP could be an incentive for investors to invest in member countries. Companies can export duty-free to markets such as China, South Korea and Japan, while manufacturing in member states where Labour is relatively cheap, which would more than offset the extra logistics costs. RCEP is unique in that it is the only multilateral free trade agreement that includes China, the report said. “But that could soon change as Beijing has formally submitted its application to join the Comprehensive and Progressive Trans-Pacific Partnership.” The CPTPP’s trade rules are much more liberal than RCEP’s, so it is crucial that the LATTER be approved and come into force quickly, the report said. “If China eventually becomes a member of the CPTPP, the two agreements could start to look similar.”

 

 

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Post time: Dec-01-2021