WHAT is the Regional Comprehensive Economic Partnership (RCEP) agreement? Why is it so important? How will it benefit its members and beyond? Some key questions about this new trade deal are answered below.

What is it?

The RCEP agreement was signed among 15 participating countries in November 2020 after eight years of negotiation, which are 10 ASEAN members and some of their major trading partners, namely China, Japan, the Republic of Korea, Australia, and New Zealand.

The deal took effect Jan. 1, 2022, initially in 10 countries that have submitted instruments of ratification with the ASEAN Secretariat.

Under the agreement, more than 90 percent of merchandise trade between approved members will eventually be subject to zero tariffs. The countries within the bloc will slash economic and trade restrictions to facilitate flows of goods and factors, deepen the division of labor and cooperation, and improve production efficiency.

Why is it important?

The 15 RCEP member states are home to 2.27 billion people, with a combined gross domestic product of US$26 trillion and total exports of US$5.2 trillion, which account for about 30 percent of the world’s total, respectively.

China and Japan, the world’s second- and third-largest economies, will see their first bilateral tariff cuts in the form of zero-tariff treatment under the RCEP, with taxes on 86 percent of products from Japan and 88 percent of products from China eventually down to zero.

Any benefits?

The RCEP will raise global national incomes in 2030 by an annual US$186 billion, noted a working paper of the Peterson Institute for International Economics.

With a massive population, diverse membership, and great potential, the free trade bloc will boost trade growth and facilitate global economic recovery.

The importance of the RCEP is accentuated amid the COVID-19 pandemic. Trade within agreements like the RCEP has been relatively more resilient against the pandemic-induced global trade downturn, UNCTAD research said.

What is China’s role?

China has played an active role in bolstering regional trade and growth and pushing forward the establishment of the RCEP.

The country took the lead in ratifying the RCEP agreement and is ready to implement it and fulfill a total of 701 binding obligations as the trade deal enters into force.

As the new agreement kicks in, China’s pursuit of high-level opening up will offer more opportunities for ASEAN members and the rest of the world. Twenty-two more service sectors will be opened, adding to the 100-sector commitment when China joined the World Trade Organization two decades ago.

(Xinhua)