Bangkok, Dec. 31 (BNA): Members of the China-based Asian trade bloc that takes effect on Jan. 1 hope that the initiative, which includes about a third of global trade and business activities, will help boost their recovery from the pandemic.
The 15-member Regional and Comprehensive Economic Partnership includes China, Japan, South Korea and many other Asian countries. It does not include the United States or India, according to the Associated Press.
The agreement lowers tariffs on thousands of products, simplifies trade procedures and provides reciprocal benefits for member states. It also takes into account issues such as e-commerce, intellectual property and government procurement.
But it has less stringent labor and environmental requirements than those expected from countries in the European Union or the smaller Trans-Pacific Partnership, which includes many of the same countries but not China.
The RCEP is expected to boost trade within the region by 2%, or $42 billion, both through increased trade and also by diverting trade with changing tariff rules, experts say.
The agreement is a coup for China, the largest market in the region with more than 1.3 billion people.
Additional help will be needed: Lockdowns, border closures, mandatory quarantines and other restrictions have cost millions of people their jobs, while also contributing to manufacturing and shipping disruptions crippling supply chains around the world.
Countries that have faced outbreaks of the rapidly spreading omicron coronavirus have reined in recent moves to reopen international travel.
Regional economies contracted 1.5% in 2020. They have bounced back, with the Asian Development Bank forecasting 7.0% growth this year – buoyed by lower numbers compared to the previous year. But next year growth is expected to slow to 5.3%.
The pandemic has slowed progress in ratifying the trade deal for some countries.
China was the first country to ratify the RCEP, in April, after it was signed in November 2020 in a virtual meeting of leaders of its 15 member states.
Indonesia, Malaysia and the Philippines have not yet done so, although they are expected to ratify it soon. Myanmar, whose government was ousted by the military on Feb. 1, has ratified the agreement, but that is pending acceptance by other members.
China’s Vice Commerce Minister Ren Hongbin said Thursday that Beijing is well prepared for the new trade bloc, having already fulfilled 701 “binding commitments” to the RCEP.
China’s RCEP appeals to other developing countries because it lowers barriers to trade in agricultural, manufactured goods and components, which make up most of their exports. Little is said about trade in services and companies’ access to operate in each other’s economies, which is what the United States and other developed countries want.
The RCEP would have originally housed about 3.6 billion people. Excluding India, which has withdrawn, it still covers more than two billion people and nearly a third of all commercial and commercial activities.
The United States-Mexico-Canada Agreement, or USMCA, the revised version of the North American Free Trade Agreement under Trump, covers slightly less economic activity but less than a tenth of the world’s population.
The European Union and the Comprehensive and Progressive Trans-Pacific Partnership, the revised version of the agreement rejected by former President Donald Trump, is also smaller in size. The RCEP includes six of the 11 remaining members of the CPTPP.
But Eli Rahmat Yasin, a member of the committee in charge of agriculture, environment, forestry and marine affairs, questioned Indonesia’s Trade Minister Muhammad Lutfi about the wisdom of Indonesia’s participation, noting that India had pulled out largely due to concerns that Chinese imports had flooded its markets.
Lutfi responded that RCEP would help boost exports and attract additional inflows of up to $1.7 billion in foreign investment by 2040.
The trade conglomerate is expected to open many service sector jobs to workers in member states – a huge draw for countries like the Philippines that rely heavily on migrant worker remittances.
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