News Analysis: RCEP opens up myriad opportunities for many economies

Source: Xinhua| 2017-07-20 14:44:10|Editor: Zhou Xin
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by Le Yanna, Bui Long

HANOI, July 20 (Xinhua) -- After the U.S. withdrawal from the Trans-Pacific Partnership (TPP), the Regional Comprehensive Economic Partnership (RCEP) is considered by Vietnam as an alternative choice, and its negotiations are expected to be wrapped up by the end of this year, opening up significant opportunities for many economies.

The RCEP is a proposed free trade agreement (FTA) between the 10 member states of the Association of Southeast Asian Nations (ASEAN) and the six countries with which ASEAN has existing free trade agreements - Australia, China, India, Japan, South Korea and New Zealand.

The countries are expected to conclude RCEP talks by the end of this year, ASEAN Secretary-General Le Luong Minh told reporters on the sidelines of the conference "ASEAN at 50: ASEAN Economic Community and the Opportunities for Vietnamese Businesses."

The conference was host by the Vietnamese Ministry of Foreign Affairs and the Jakarta-based Economic Research Institute for ASEAN and East Asia (ERIA) in Hanoi on Wednesday.

The RCEP negotiations focus on trade in goods and services, investment, economic and technical cooperation, intellectual property, competition, dispute resolution, e-commerce, and matters related to small and medium enterprises (SMEs), among others.

"While anti-globalization and trade protection trends are emerging in the world, ASEAN is clinging to its open regionalism policy, opening up big opportunities for not only regional and global integration processes but also for businesses in ASEAN member states," Minh said.

The 16 RCEP participating countries account for almost half of the world's population, and contribute over a quarter of its exports and some 30 percent of global gross domestic product (GDP).

The RCEP will also offer a framework aimed at reducing trade barriers and ensuring improved market access for goods and services for businesses in the region, through some key actions and activities.

They include recognizing ASEAN's centrality in the emerging regional economic architecture and the interests of ASEAN's FTA partners in bolstering economic integration.

The framework also stresses, as well as economic cooperation among the participating countries, trade facilitation, investment and enhanced transparency in trade and investment ties between the countries, as well as SMEs' engagements in global and regional supply chains, and broadening and deepening ASEAN's economic engagements with its FTA partners.

On the sidelines of the conference, Vietnamese Deputy Minister of Foreign Affairs Nguyen Quoc Dung told reporters that after the U.S. exit from the TPP, many people considered the RCEP as being an alternative, so the pressure on speeding up negotiations to finalize the partnership is increasing.

Despite differences in economic scales and interests, the 16 RCEP-participating countries share a common determination in and aspiration for accelerating the negotiations, the deputy minister said.

According to ERIA's senior researchers' presentations and documents released at the conference, the RCEP will be the main venue of ASEAN's deepening economic relations with the rest of East Asia.

The RCEP is now also the main mechanism for the official initiatives to deepen their economic integration and cooperation in East Asia. According to the senior researchers, a major challenge for ASEAN is how to steer the RCEP towards its successful conclusion that takes into consideration the widely differing levels of development and different concerns of the 16 countries involved in the talks.

Given that ASEAN's intra-regional trade accounts for only a quarter of its total trade, and because production networks go beyond ASEAN and deeply involve the rest of East Asia, ASEAN economic integration with the rest of the East Asian countries is expected to bring large gains to ASEAN economies.

However, the RCEP should be designed well and incorporate significant improvements over and above those of the existing ASEAN+1 FTAs and generate significant economic benefits for ASEAN member states and the region.

Many economists proposed that the RCEP should set a target of 95-percent tariff elimination and take a "common concession" approach, as well as strengthen liberalization commitments in trade in goods and services.

In addition, analysts with knowledge of the matter have also recommended that the rules of origin should be a focal point, as well as minimizing the ASEAN+1 FTA overlapping rules and commitments.

Other proposals traverse the ideas of adopting liberal regional accumulation rules to help ASEAN companies' participation in the East Asian production networks, and provide deeper economic cooperation for facilitation measures as compared to the ASEAN+1 FTAs.

According to Ponciano Intal, ERIA's senior economist, firms will benefit from the increasingly growing middle class in ASEAN in particular and East Asia in general, with goods producers and service providers relying on the Chinese market.

China established dialogue relationship with ASEAN, which groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, in 1991. The two sides forged a strategic partnership in 2003.

China is the largest trading partner of ASEAN, and the regional block is China's third largest trading partner.

Two-way trade reached 452.2 billion U.S. dollars last year, while combined two-way investment had exceeded 183 billion U.S. dollars by the end of May 2017.