The world’s largest free trade zone by size that boasts the largest population and the greatest potential for development officially set sail, as the deal of the Regional Comprehensive Economic Partnership (RCEP) was officially inked by the 10 member countries of the Association of Southeast Asian Nations (ASEAN), China, Japan, South Korea, Australia and New Zealand at the 4th RCEP Summit on Nov. 15.
RCEP member countries are complementary in economy and enjoy close exchanges in trade and investment, as well as broad and intensive cultural and people-to-people communication. They have a bright prospect of cooperation. The signing of the RCEP deal conforms to the trend of the times and the development interests of each party. It is a common expectation of all member states.
The 15 members that signed the RCEP agreement this time have a combined population of 2.27 billion. Their total GDP adds up to $26.2 trillion, and total export $5.2 trillion. All the three figures account for around 30 percent of the world’s total respectively.
Covering developed countries, developing countries, and the least developed countries, the RCEP accommodates the needs of all parties to the greatest extent and accords the least developed countries the special and differential treatment. It also helps developing members enhance capacity building, and aims to make regional development open, inclusive, balanced and beneficial to all.
The RCEP has built high-level regional economic and trade rules. Targeting at building a comprehensive, modern, and high-quality free trade agreement (FTA) that is beneficial to all, the RCEP has formed opener, more free, and more transparent regional rules that cover trade in goods, trade in services and investment in a 14,000-page text. Over 90 percent of goods will eventually enjoy zero tariff, which is expected to tremendously reduce the trade cost and commodity prices in the region.
The RCEP promises to open trade in services in most sectors. As far as liberalization level is concerned, all the 15 parties made commitments higher than the level of their 10+1 free trade agreements.
On the investment side, the 15 parties all made high-level liberalization commitments through negative list on manufacturing, agriculture, forestry, fisheries and mining, greatly enhancing policy transparency.
The member states also incorporated intellectual property, e-commerce, competition and government procurement and providing for strengthened cooperation on small and medium-sized enterprises and economic and technical cooperation.
China has played an active role in reaching the agreement. It has always supported the centric role of the ASEAN, joined all negotiations and played an active and constructive part. The import and export of goods between China and other RCEP members, exceeding $1.4 trillion in value annually, will be subject to preferential tariffs following the RCEP implementation. Meanwhile, China also promised to open more than 120 service sectors, including R&D and elderly care, 22 more than the number of sectors the country had agreed to open upon accession to the World Trade Organization (WTO).
The RCEP marked the first time that China has made commitments on investment through negative list under an FTA, included the flow of data in an international pact, and comprehensively introduced intellectual property right protection in an FTA.
The world is going through profound changes unseen in a century, and the COVID-19 pandemic has been accelerating such changes. The world economy is in the doldrums, with increasing factors of uncertainty and instability. Against such a background, the signing of the RCEP is not only an icon for the integration of regional economy, but also another major outcome of China’s opening-up since the country joined the WTO. It will exert profound impacts on a new round of high-level opening-up and the promotion of win-win results, as well as play an active role in boosting global recovery and safeguarding the multilateral trading system.
The RCEP is a milestone of China’s opening-up. After the signing of the agreement, China has inked 19 FTAs with 26 countries and regions, and its trade volume with free trade partners now accounts for 35 percent of its total trade, up from the previous 27 percent. The agreement also lifted the two-way opening up between China and its partners. It will help with the high-quality development of the Belt and Road Initiative (BRI), comprehensively improve the country’s level of opening-up, and advance the building of an open world economy and a community with a shared future for mankind.
The RCEP is an important platform for China to foster a new development paradigm. All RCEP members are vital economic and trade partners of China. China’s trade volume with these countries accounted for 1/3 of its total last year, and 10 percent of China’s foreign investment came from them. The huge regional market of the RCEP will further release cooperation potential in all sectors and make the pie bigger for the regional economy and trade, so that enterprises from each country can better share the opportunities.
The widening of market access and facilitation measures will bring more featured products, quality services and advanced technologies to China from regional countries, better satisfy the demand of enterprises to advance production and the demand of the people for a better life, and smoothen the domestic economic cycle.
The RCEP will enhance the connectivity between domestic and foreign markets and resources, and effectively incorporate China into the global industrial, supply and value chains. Besides, it will also promote industrial upgrade and high-quality economic development, the dual circulation pattern, and the building of a new development paradigm.
The pact marks a victory of multilateralism and free trade. The global spread of COVID-19 has led to contracted international trade and investment, and hindered the industrial and supply chains. Besides, the economic globalization is also facing headwinds of unilateralism and protectionism. Against such background, the RCEP members have made common promises to lower tariffs, open markets, reduce barriers and firmly support economic globalization.
According to an international think tank, the RCEP is expected to drive a net increase of $519 billion in exports and $186 billion in national income for its members each year.
The RCEP deal fully demonstrated the clear-cut stand of its members to oppose unilateralism and protectionism, voice supports for free trade and the multilateral trading system. It is a light in the shadow and a warm breeze in the storm, which will vitalize each country’s confidence to boost development and inject positive energy into global COVID-19 cooperation and global recovery.