The Scale of RCEP
The long-awaited Regional Comprehensive Economic Partnership (RCEP), covering nearly a third of the global population and about 30 percent of global GDP, was signed by its 15 members on Sunday at the fourth RCEP summit in Hanoi.
It is the world's biggest free trade agreement (FTA) measured in terms of GDP, larger than the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the European Union, the recent U.S.-Mexico-Canada Free Trade Agreement or Mercosur, according to Rajiv Biswas, chief economist for the Asia-Pacific region of IHS Markit.
Development History of RCEP
The agreement will promote fewer tariffs on trade in goods, and better rules for trade in services, including market access provisions for service sector suppliers from other RCEP countries. Besides, non-tariff barriers to trade among its members, such as customs and quarantine procedures and technical standards will be reduced.
It will also allow for one set of rules of origin to qualify for tariffs reduction with RCEP members. A common set of regulations mean fewer procedures and easier movement of goods.
Initiated by the Association of Southeast Asian Nations (ASEAN) in 2012, RCEP is a proposed FTA between the 10 ASEAN member states and their six FTA partners, namely China, Japan, South Korea, Australia, New Zealand, and India who was involved in earlier discussions but opted out last year.
Since its introduction at the 19th ASEAN Summit in November 2011, more than 30 rounds of negotiations and a number of intersessional and ministerial meetings on RCEP have been held.
In November last year, 15 participating countries of the agreement concluded text-based negotiations and essentially all market access issues at an RCEP summit in the Thai capital city of Bangkok.
The Importance of RCEP
The RCEP agreement will accelerate the building of the ASEAN economic community and thereby allow ASEAN to become dynamic and strong partners in promoting cooperation for shared prosperity, Vietnamese Prime Minister Nguyen Xuan Phuc said at the signing ceremony held via video conference.
China and Japan have reached a bilateral tariff reduction arrangement for the first time, achieving a historic breakthrough, according to China's Ministry of Finance (MOF) on its website.