Asia-Pacific is the region to watch
The Asia-Pacific region certainly has more weight these days in the global economic system, especially as the Regional Comprehensive Economic Partnership will further stimulate economic integration in the region and accelerate the shift in the global economic balance by Asia-Pacific favor.
The RCEP agreement, which was signed last November, brings together 15 Asia-Pacific countries, including China and 10 members of the Association of Southeast Asian Nations, to form the largest bloc of free trade in the world which covers almost a third of the world population as well as GDP.
On June 25, Japan ratified the agreement, and in doing so, it became the third member to move towards implementation of RCEP.
Prior to that, China and Singapore had completed the ratification process in April. The pact will enter into force 60 days after its ratification by six ASEAN members and three non-ASEAN countries.
China sees the signing of the RCEP agreement as a victory for free trade and multilateralism. As the world’s second-largest economy, China still has a strong stance on deepening reforms and opening up wider to the rest of the world.
Once in force, the RCEP agreement will eliminate tariffs on up to 90% of goods traded between its signatories over the next 20 years. The agreement will also standardize the investment rules between its signatories.
Experts praise the common rule of origin established by RCEP. Only 40 percent of the regional content is required for goods to be considered of RCEP origin, a much lower threshold requirement compared to many other free trade agreements. The rule of origin defines whether a product comes from one of the member countries to benefit from tariff eliminations.
In addition, as countries in the region have different levels of development and there are no common benchmarks for environmental protection and labor standards, less restrictive rules in the RCEP could involve fewer obstacles to trade within the region.
A report by trade credit insurer Euler Hermes released earlier this year said that while developed economies accounted for around 80 percent of global GDP in 2000, the ratio fell to around 60 percent in 2019, the Asia-region. Pacific representing 8 percentage points of the decline of 20 percentage points.
RCEP has sent a strong signal for continued and enhanced integration in the region, while intra-regional trade in Asia-Pacific is already very high compared to other regions; and Asia-Pacific economies also on average exhibit relatively strong levels of complementarity with their regional trading partners, according to the report.
Of total world trade, intra-regional trade in Asia-Pacific averaged 25 percent in the 2010s, compared to 17 percent and 6 percent for the European Union and the North American Free Trade Agreement, respectively. .
RCEP will also stimulate the development of a wide range of emerging industries, including cross-border e-commerce and logistics.
It is well recognized that the establishment of a comprehensive and unified set of e-commerce rules at the multilateral level reflects the region’s consensus on many key issues, including the cross-border transmission of information, the storage of information, the online consumer protection, personal information protection and cybersecurity, which will create a stable institutional environment conducive to the growth of the digital economy.
Perhaps the remarks of Edward Yau, Secretary of Trade and Economic Development of the Hong Kong Special Administrative Region of China, during an Asia-Pacific Economic Cooperation videoconference recently, captures RCEP’s role in regional development.
High-quality regional free trade agreements would bring tangible economic benefits and strengthen the foundations of the regional economy, he said, calling on economies to support the rules-based multilateral trading system and deepen the economy. regional economic integration with a view to the eventual realization of the free trade area. Asia-Pacific.
Hong Kong looks forward to entering a formal dialogue on its RCEP membership when RCEP is ready to engage new partners, Yau said.
If things go as planned, the RCEP deal is expected to come into effect next year, and the Asia-Pacific region can then become an even greater power for global economic development.