Wu Ke

hypotherm@163.com

TO achieve better performance during an economic slowdown, stimuli can be tailored to activate the market and help the world better cope with the COVID-19 pandemic.

The ministers of the Regional Comprehensive Economic Partnership (RCEP) countries showed a strong willingness to support a shared regional economic landscape by eventually signing the agreement via video conference in Hanoi in November 2020. The agreement, first proposed in 2012, came into effect at the beginning of this year to facilitate regional trade, investment and supply chains.

The RCEP, which includes 10 ASEAN members, namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, two Oceania neighbors — Australia and New Zealand, and three participants from East Asia — China, Japan and South Korea, is a free-trade agreement aiming to cut tariff and non-tariff barriers, strengthen supply chains, and codify new e-commerce principles. Confronted with uncertainties in the world economy, the RCEP brings major emerging markets together, many of which already are counting on China as their biggest trading partner.

The sections covered by the RCEP agreement include trade in goods, services, investments, standards and technology, animal and plant quarantine, economic and technical cooperation, intellectual property, e-commerce, dispute resolution and other areas. All the above sections serve to form an integrated market between member countries to hopefully make the RCEP one of the largest and most influential free-trade agreements in the world. As the agreement comes into effect, the member states are to reduce tariffs and open markets between each other in at least 100 sectors.

As a free-trade agreement, the RCEP has its uniqueness. At present, even countries with bilateral trade deals often impose high tariffs on finished products if a significant portion of the raw materials comes from a third country. The RCEP allows business entities to source raw materials within the group, with their final products enjoying low or no tariffs. This will facilitate trade and investments among members and improve efficiency of the markets.

The RCEP is in conformity with China’s new “dual circulation” strategy, since the agreement can help consolidate the China’s competitiveness and reallocate resources in both international and domestic markets. As a supportive promise from China for economic recovery during the pandemic, the agreement will grant goods from RCEP members easier access to China’s market of 1.4 billion people.

The huge volume of its economy enables China to play a crucial part in RCEP by offering a huge market and by offering financial support to its partners. China also helps other developing countries to build infrastructure and train technological professionals, although China is in favor of and promotes the key role of ASEAN in RCEP.

During a pandemic when protectionism and tariff wars prevail, the RCEP is a great step toward multilateralism. What is also worth mentioning is the RCEP will serve to promote the economic exchanges between China and Japan.

In the hope for a post-pandemic economic recovery, a win-win path like the RCEP is a timely effort. The RCEP indicates that the idea of dialogue and cooperation is still worth striving for in today’s world.

(The author is an associate professor with Guangzhou Maritime University.)