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RCEP a bright spot in bleak global economy
RCEP a bright spot in bleak global economy
The COVID-19 pandemic has
cast a long shadow and created uncertainty over the global economy. The signing
of the Regional Comprehensive Economic Partnership (RCEP), however, offers a
beacon of hope, as it marks a victory for multilateralism and free trade
regionally and globally.
After eight years of negotiations, ASEAN and five of its partners finished an
enormous workload to successfully conclude the deal, Prime Minister Nguyen Xuan
Phuc said at the signing ceremony, which took place on November 15 within the
framework of the 37th ASEAN Summit and related meetings hosted virtually by
Vietnam.
He said the signing of the deal is the pride and great achievement of the ASEAN
countries and partners in laying a foundation for a new, comprehensive,
long-term cooperation period, bringing benefits to all countries in the region.
The RECP was launched in late 2012 as an ASEAN initiative to boost trade
between its ten member states and its six dialogue partners - Australia, China,
India, New Zealand, Japan, and the Republic of Korea. During last-minute talks
on November 4, 2019, India pulled out over unresolved issues.
It is the world’s
largest trade deal, with the 15 signatory countries together
accounting for up to 32 percent of global GDP. Member economies are expected to
together generate GDP growth of approximately 137 billion USD.
The unprecedented trading arrangement comprises a diverse mix of developed,
developing, and least-developed economies in the region.
Analysts expect that the pact will fuel the development of regional and global
supply chains and further push the economic growth of ASEAN and its partners,
thanks to a wide range of open-market commitments on trade of goods, services
and investment, the simplification of customs procedures, and trade
facilitation.
In light of the adverse impact of COVID-19, the signing of the RCEP
demonstrates the signatory countries’ strong commitment to supporting economic
recovery, inclusive development, and job creation, while strengthening regional
supply chains and supporting an open and inclusive rules-based trade and
investment arrangement.
The RCEP is viewed as the region’s urgent response to COVID-19, strengthening
resilience during the post-pandemic economic recovery process.
“The signing of the RCEP is a historic event, as it underpins ASEAN’s role in
leading a multilateral trade agreement of this magnitude, despite global and
regional challenges and eight years of negotiations,” said Secretary-General of
ASEAN Lim Jock Hoi.
Together with other free trade agreements (FTAs), the RCEP is hoped to give
further impetus to Vietnam’s reform efforts, thus rapidly improving its
business and investment environment.
Market development programmes will also be built for
Vietnam’s key export items, to give them broader access to the markets of RCEP
member states./.
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All comments [ 20 ]
The RCEP signing is considered be a driving force for promoting economic integration and protecting the multilateral trading system at a time when multilateralism is gradually losing its foothold and global growth is slowing.
It forms the world’s largest free trade area, with 2.2 billion people, or 30 percent of the global population, and a combined GDP of 26.2 trillion USD, equivalent to 30 percent of global GDP, and nearly 28 percent of global trade.
Viva Vietnam!
Vietnam is seen as a bright spot in COVID-19 prevention and control, socio-economic development, and ensuring security and social welfare. The country has also effectively carried out foreign affairs and international integration activities.
thanks to the great determination and enduring contributions of the entire Party, people and army, Vietnam relatively comprehensively completed the objectives and tasks set out for the year, with many outstanding performances.
Just like the recently ratified EVFTA and the CPTPP, the RCEP will reduce tariffs and set trade rules, and help link supply chains, particularly as governments grapple with COVID-19 effects.
The RCEP will further build on previous trade agreements within ASEAN but also include first time agreements with other countries such as Japan and South Korea. In this context, trade within ASEAN may be negligible.
Vietnam, major export categories that are expected to benefit include IT, footwear, agriculture, automobiles, and telecommunications.
The FTA would help Vietnam access large consumer markets double the size of those included in the CPTPP.
As Vietnam moves to become a high-tech manufacturer, the RCEP can help local firms increase exports and attract high-quality goods for its consumers. In addition, with demand for Vietnam’s exports like agriculture and fisheries products, Vietnam is set to benefit.
The simplification of procedures such as customs and rules of origin, will help reduce bureaucracy allowing more SMEs to participate. SMEs account for 98 percent of all enterprises in Vietnam, contributing to 40 percent of GDP, and thus the RCEP presents significant opportunities for Vietnamese SMEs to move up the value chain.
Vietnam does not fear any competition arising from the Regional Comprehensive Economic Partnership (RCEP) as the country has already participated in free trade agreements (FTAs) with higher level of commitments compared to the RCEP.
Pressure of competition from the RCEP on the economy is certain, but Vietnam has anticipated the issue as this is part of all trade deals.
Vietnamese firms must be prepared against potential negative impacts from the RCEP, especially competition from foreign peers right in the domestic ground.
RCEP was basically an agreement which unified pre-existing bilateral agreements between ASEAN and five of its major trade partners, which would not create any shocks on tariff liberalisation to Việt Nam.
The trade deal would not weigh on the trade deficit. In the long term, Việt Nam’s trade would even improve.
RCEP provided a perfect opportunity for Việt Nam and other ASEAN countries to become a centre of investment attraction.
The agreement will also provide opportunities to develop new supply chains in the region.
The pact commits signatories to maintain open markets for goods, services and investments, harmonization of rules of origin among all participants, and strengthening trade facilitation measures.
The pact will help businesses in Vietnam access large consumer markets which are double the size of GDP of those under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
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