At a summit in Bangkok, Thailand early this month, the representatives of ten ASEAN countries, plus South Korea, Japan, China, Australia and New Zealand, announced they had reached agreement on the terms of the Regional Comprehensive Economic Partnership (RCEP). The trade agreement will be signed next year if no problems emerge in the review phase.
While details of the agreement have yet to be revealed, it is clear that the agreement is less ambitious than the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) free-trade agreement that partly entered into force at the end of last year. Seven CPTPP countries are also part of the RCEP agreement. Media reports note that the RCEP agreement focuses on goods trade and mainly unifies bilateral tariff arrangements of its members. Customs tariffs will decline in many fields. Some observers note that the agreed unification of rules of origin may be even more important than lower tariffs as it promotes production chains within the region.
Countries acceding to the RCEP trade pact represent almost 30 % of the world’s population and global GDP (in nominal dollar terms). The agreement’s economic impacts are expected to be relatively modest, however, and further diminished by the long transition periods.
China, which accounts for 62 % of the population in the RCEP area and 54 % of its nominal GDP, strongly supports the trade agreement. India withdrew from the agreement after it failed to gain concessions for its agricultural sector. India also feared that its participation in RCEP would lead to a flood of Chinese products onto its market.