The world’s largest free trade agreement, the Regional Comprehensive Economic Partnership Agreement, RCEP, entered into force on Saturday, January 1, giving 15 countries around the Pacific Rim access to trade with each other with fewer tariffs, reports Environment News Service.
About the new trade agreement
According to the World Bank, the agreement covers 2.3 billion people accounting for US$25.8 trillion in output, as well as $12.7 trillion in trade.
The new trade agreement was signed November 15, 2020 and took effect for 10 of the signatory countries, including China, Japan, South Korea and Australia, on Saturday, the first day of 2022.
Australia’s Minister for Trade, Tourism and Investment Dan Tehan welcomed the RCEP’s entry into force for Australia, Brunei Darussalam, Cambodia, China, Japan, Laos, New Zealand, Singapore, Thailand, and Vietnam. South Korea will enter the agreement on February 1.
India withdrew from the RCEP talks in November 2019. There is a fast track accession process in place should India wish to re-join RCEP in future.
When will RCEP enter into force?
As for the remaining signatory States, the RCEP Agreement will enter into force 60 days after the deposit of their respective instruments of ratification, acceptance, or approval to the Secretary-General of ASEAN, the Association of Southeast Asian Nations.
Speaking for ASEAN, Secretary-General Dato Lim Jock Hoi said, the RCEP’s expeditious ratification process by its various members is “a true reflection of our strong commitment to a fair and open multilateral trading system for the benefit of the people in the region and the world.”
About RCEP
Minister Tehan said, “RCEP will help stimulate growth and investment across the region, providing increased opportunities for Australian business. With Australian-made products and services held in such high regard in these markets, RCEP is a fantastic opportunity for Australian businesses.”
“By streamlining requirements around rules of origin, RCEP will advantage local sourcing of goods and promote collaboration through regional value chains, which our businesses are primed to partake in,” Tehan said.
In the state-run Chinese news outlet Xinhua on January 1, writer Dong Yue elaborated, “The RCEP is expected to facilitate the building of an open global economy and strengthen globalization.”
“Distinct from the West-dominated globalization practices, in which drawbacks including a widening development divide and deficient global governance abound, the RCEP features remarkable openness and inclusiveness, providing an inspiration for future efforts to enrich economic globalization,” Dong wrote, indicating strong support of the agreement by China’s government.
“The pact covers a wide range of areas such as tariff reductions, trade facilitation and the opening-up of services and investment, while taking into account the diverse development stages and economic needs of each member, developed or developing,” explained Dong.
“The RCEP has the potential to shape trade and investment patterns in Asia and the Pacific well into the future and to influence the direction of global economic cooperation at a challenging time,” the Asian Development Bank said in an October 2021 analysis.
Results suggest that the RCEP could “generate sizable global income gains.” Together with the Comprehensive and Progressive Agreement on Trans-Pacific Partnership, it is expected to strengthen the region’s manufacturing supply chains, raising productivity and increasing wages and employment.
Did you subscribe to our daily Newsletter?
It’s Free! Click here to Subscribe
Source: Environment News Service
