January 19, 2022

The Regional Comprehensive Economic Partnership (RCEP) is an Asia-Pacific Free Trade Agreement signed on 15 November 2020. The agreement had been negotiated since 2012 and was signed by 15 countries. The Association of Southeast Asian Nations (ASEAN) includes Brunei, the Philippines, Indonesia, Cambodia, Laos, Malaysia, Myanmar, Singapore, Thailand and Vietnam, as well as Australia, South Korea, Japan, China and New Zealand. The treaty came into force on January 1, 2022. The RCEP agreement covers more than two billion people and its member countries make up about a third of the world's gross domestic product. It is the world's largest trade agreement in terms of GDP. The agreement was signed at the ASEAN summit in Hanoi, Vietnam. China was reported to have promoted the agreement, for example by promising its smaller partners help in obtaining a coronavirus vaccine. The purpose of the agreement is to reduce customs duties between Member States. The agreement also contains various provisions on intellectual property rights, communications, financial services, e-commerce and expert services. RCEP member states have already had free trade agreements with each other, but they have had more restrictions. The agreement does not deal with environmental protection or workers' rights in the contracting parties. E-commerce has been estimated in advance to be one of the major industries benefiting from the agreement. The trade agreement will not enter into force until it has been ratified by the contracting parties, which could take a year, for example. Following the signing of the agreement, the leaders of the 15 contracting parties, who met virtually for the fourth RCEP meeting in response to the corona pandemic, issued a joint statement on 15 November 2020 highlighting the importance of India as a potential contracting partner. At the same time, they pointed out that India can join the agreement in the future if it so wishes. During the negotiations, several contracting parties made clear their desire for India to join the agreement. Australia, for example, has explicitly said it wants India involved; the country does not already have a bilateral free trade agreement with India. On the other hand, Indian Prime Minister Narendra Modi has pointed out that the trade balance between India and China is already in the US $ 60 billion annual deficit for India. The reduction in import tariffs is feared to cause an influx of cheap Chinese products into India, which would further weaken the balance of trade between the two countries. India also wanted to protect its own subsistence life, which is considered vulnerable, such as the textile sector, dairy and agricultural production. There were growing fears that dairy products would be imported from Australia and New Zealand, for example. Along with India, for example, the impact of the FTA is being closely monitored, as several of its LDC rivals (Myanmar, Laos and Cambodia) are expected to benefit from increased investment in China and Japan, such as China, Japan and South Korea. Myanmar, Laos and Cambodia are the least developed countries in a more secure position than the other parties, as they will only have to exempt 30% of trade between them from import tariffs when the RCEP enters into force, while other countries are obliged to eliminate tariffs from 65% of their trade. According to Chapter 12 of the FTA on e-commerce, the three countries will not have to open e-commerce like any other partner for five years from the entry into force of the agreement.


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