On 15th February 2020, the world’s largest trading bloc was born. The Regional Comprehensive Economic Partnership (RCEP) is a grouping which represents almost a third of our planet, in terms of population and GDP.
Signatories are Australia, China, Japan and New Zealand, along with members of the existing ASEAN association, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
This mix of countries with quite different economies took eight years to negotiate an agreement. One that runs alongside the ASEAN deal and the Comprehensive & Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The latter is essentially the Trans Pacific Partnership (TPP) without the USA, who pulled out following Donald Trump’s election win. Joe Biden may try to renogotiate entry but hinted at a more protectionist approach and the world has changed.
A More Open Stance
China is gradually shifting investment from the US to ASEAN countries and this is the first time they have joined a multi lateral trade pact. The change of heart to place China under common rules and open doors is significant.
The RCEP deal has been said to be not sufficiently comprehensive, or not cut tariffs as deeply as they might. The size of the deal still makes this valuable and there are other ways to encourage trade across countries.
Provisions on intellectual property and professional, or financial services will be an asset. The focus on improving rules of origin of product parts will make a difference, removing complexity and anomalies which exist in other treaties.
In a pact which is larger than the US-Mexico-Canada deal, or the EU, the practical changes and improved communication could have an impact.
Timing for completion has been influenced by a need to recover from the coronavirus pandemic. The Chinese premier called the deal “a ray of light and hope amid the clouds”, along with mentioning longer term free trade.
His country may see greater influence and income but smaller nations will also benefit, their economies becoming an improved opportunity for all. With historical ties and a fair base of English, this includes the UK.
Should you need to visit with business items, or export temporarily in any way, most larger nations in the RCEP accept ATA carnets. A removal of hassle to help establish partnerships, or use local facilities.
With our departure from the EU, however that finally works out, looking at other markets which are coming together makes sense.