World’s largest free trade agreement comes into force across Asia-Pacific
Bangkok, Jan 1 (EFE).- The world’s largest free trade agreement, signed by 15 Asia-Pacific countries, entered into force on Saturday after more than a decade of negotiations.
The Regional Comprehensive Economic Partnership (RCEP) came into effect for Australia, Brunei, Cambodia, China, Japan, Laos, New Zealand, Singapore, Thailand and Vietnam, while on Feb. 1 it will do so for South Korea. Myanmar, Philippines, Indonesia and Malaysia still need to ratify it.
“The entry into force of the RCEP will provide a boost to the trade and business ties between Singapore and the RCEP parties,” Singapore’s Trade and Industry Minister Gan Kim Yong said in a statement on Thursday.
With streamlined rules of origin and regional cumulation provisions, businesses will have greater flexibility to tap on these preferential market access benefits and be able to take advantage of regional supply chains, the statement said.
One notable absence is the United States, which in 2017 left another mega trade deal that also includes countries in the region, the Trans-Pacific Partnership (TPP), which can generate commercial advantages for Beijing in Asia-Pacific.
RCEP, which for the first time includes China, Japan and South Korea in the same trade agreement, addresses trade in goods and services, the digital economy, intellectual property and trade disputes, among other issues, but does not contain regulation on labor rights and environmental impact.
It is estimated that the combined gross domestic product (GDP) of the signatory countries amounts to about $26.2 trillion, which is equivalent to 30 percent of global GDP.
The agreement represents about 25 percent of world trade and a market of about 2.3 billion people – about 30 percent of the world’s population – in the region with the highest economic growth in the world.
Signatory countries are projected to gain $174 billion in profit by 2030, according to the Asian Development Bank.
RCEP negotiations began in 2012 within the Association of Southeast Asian Nations (ASEAN) and other countries with which the bloc already had free trade agreements: Australia, China, India Japan, New Zealand and South Korea.
However, India pulled out of the deal in 2019 to protect its market and workers over fears of being inundated with cheaper products, mainly from China. EFE