The Regional Comprehensive Economic Partnership (RCEP) agreement, the world’s largest free trade agreement, entered into force on Saturday, injecting vitality into multilateralism and free trade amid the COVID-19 pandemic and global economic recovery. The RCEP, signed by 15 Asia-Pacific countries and covering roughly 30 percent of the world’s gross domestic product, trade and population, will give a strong boost to international trade and investment and contribute to global economic recovery.
After the agreement takes effect, more than 90 percent of merchandise trade among members that have approved the agreement will eventually be subject to zero tariffs. The RCEP was signed on Nov. 15, 2020 by 15 Asia-Pacific countries — 10 members of the Association of Southeast Asian Nations (ASEAN) and China, Japan, the Republic of Korea, Australia and New Zealand — after eight years of negotiations that started in 2012.
The deal came into force initially in 10 countries that have submitted instruments of ratification with the ASEAN Secretariat. Covering nearly a third of the world’s population and accounting for about 30 percent of the world GDP, the new free trade bloc aims to facilitate trade and investment in the Asia-Pacific region, and boost economic globalization. With optimized trade rules among signatories, streamlined procedures and wider opening-up in the sectors of services-trade and investment, the RECP will bring tangible benefits to the member countries.
China will fully implement the obligations of the RCEP agreement and guide local governments, industries and enterprises to better seize the opening-up opportunities. The country will work actively with other members to build the RCEP mechanism into a major platform for economic and trade cooperation in East Asia. The RCEP enables China and Japan to build a direct free trade partnership with tariffs on 86 percent of products from Japan and 88 percent of products from China eventually down to zero. A study from the Asian Development Bank predicted that the RCEP will significantly contribute to post-pandemic economic recovery in the Asia-Pacific region and worldwide. By 2030, it will increase members’ incomes by 0.6 percent, adding 245 billion U.S. dollars annually to regional income and 2.8 million jobs to regional employment, according to the study.
According to the agreement, RCEP covers a wide range of areas, including tariff reduction, trade facilitation and opening up of services and investment. Over 90 percent of trade in goods among approved member states will be tariff-free, and all member states will significantly reduce restrictions on economic and trade cooperation, facilitate the flow of goods and factors of production, and improve production efficiency.
It will also help strengthen industrial chain coordination and optimize supply chain layout in the Asia-Pacific region, facilitate deeper integration of industrial chains and supply chains among members, and facilitate the free flow of economic factors. The RCEP integrated market will further tap the cooperation potential of member states in various fields, ease the pressure brought by anti-globalization and the impact of COVID-19, release the win-win dividends of market sharing and common prosperity to the world, and inject new vitality into free trade and multilateralism.
It is fair to say that the entry into force of RCEP, the world’s largest free trade agreement, is bucking the ugly trend of trade protectionism and anti-globalization, and setting up a new norm of free trade and investment facilitation. The COVID-19 pandemic has led to sluggish global economic growth and a severe downturn in international trade