Beijing, 1 January 202 (TDI): The Regional Comprehensive Economic Partnership (RCEP) takes effect today, on January 1, 2022, to create the world’s largest free trade area in terms of trade or population.
It is considered a massive coup for regional economic integration, international cooperation, and free trade. The RCEP covers the market of 2.2 billion people or about 30% of the world’s population. With a combined gross domestic product (GDP) of $ 26.2 billion or about 30% of the world’s GDP.
World’s Largest Trade Agreement: RCEP
The world’s largest trade agreement involving China and excluding the US takes effect today. It comes as Australia and New Zealand have announced they have already reached an agreement. The Regional Comprehensive Economic Partnership or RCEP was signed last year by 15 Asia Pacific countries.
These countries are 10 members of the Association of Southeast Asian Nations and their major trading partners (ASEAN). They are China, Japan, South Korea, Australia, and New Zealand. Australia said in a statement on Tuesday that its ratification with New Zealand paved the way for the treaty to take effect on January 1, 2022, and allowed RCEP to reach a milestone.
In recent years, trade protection has emerged and even strengthened since the COVID pandemic. Which poses significant challenges to economic trade and sustainability. The implementation of the RCEP strategic plan is not only an important achievement of international cooperation but also a milestone in the development of economic trade.
United Nations (UN) Conference on Trade and Development
According to an analysis by the United Nations (UN) Conference on Trade and Development (UNCTAD), the economic size of the RCEP and its trading capacity will make it a center of the global trade crisis. The RCEP is not only the largest free trade agreement but also the most comprehensive, modern, and high-quality enterprise.
It includes not only trade in goods but also trades in services, investment, technology, intellectual property rights, and e-commerce. In the eyes of Stephen Perry, chairman of Britain’s 48th Group Club, RCEP is an unmistakable historic formation in the world of three cooperative regions.
They are Asia Pacific, North America, and Europe. After the RCEP comes into operation, developing and underdeveloped economies in the region will receive significant economic and technical assistance. To close a growing gap between its members and promote inclusive development.
Liu Ziyang, a professor at Kyonggi University in South Korea, said the start of the agreement would boost regional and global trade confidence along with promoting regional integration and protecting free trade and international trade. For RCEP members, a series of major benefits, such as tax cuts, trade, and the distribution of economic goods, will create a more cohesive platform for regional cooperation.
Association of Southeast Asian Nations (ASEAN)
According to Japanese government estimates, RCEP could make 91.5% of Japan’s industrial assets tax-free, increase Japan’s GDP by 2.7% and create 570,000 jobs, generate more economic benefits than any signed trade agreement.
On the day of the RCEP launch, Cambodia will officially take over the rotating presidency of the Association of Southeast Asian Nations (ASEAN). According to the Cambodian Ministry of Trade, the regional agreement could increase Cambodia’s sales and investment by 7.3% and 23.4% respectively.
Not to mention special prices for agricultural and industrial products. A series of new regulations and mechanisms will facilitate the efficient and effective flow of regional production resources as well as enhance the current supply chain around the world.
William Jones, Washington Bureau Chief of the US publication Executive Intelligence Review, believes that the increase in trade and investment brought about by the RCEP will help fix the chains disrupted by the COVID pandemic.
“I see the power of RCEP becoming an Asia Pacific supply chain,” said Professor Lawrence Loh, Director of the Center for Governance and Sustainability at the National University of Singapore. The world will benefit from vigorous regional dynamism.
Implementation of the RCEP
The implementation of the RCEP responds to the call for time to build a more open world economy. And China’s expanded opening will not only further its development but also benefit other RCEP countries.
Once the RCEP comes into effect, about 30 percent of China’s exports will receive tax-free treatment. And access to service trade and investment will also improve, said Liang Guoyong, Senior UNCTAD Economist.
In the eyes of Professor Tu Xinquan, executive director of the China Institute for WTO Studies, University of International Business and Economics, RCEP is important in China to build a developmental paradigm for double rotation.
As many RCEP members are China’s closest neighbors and major economic partners, it is very important to strengthen economic and trade relations with them in order to integrate the first layer of international distribution.
Experts are saying that China could be the engine of global economic recovery after the launch of the RCEP, as the epidemic situation subsides by 2022.
