RCEP set to boost global growth

BEIJING: The Regional Comprehensive Economic Partnership agreement, which will take effect today, is expected to significantly boost the regional and global economies and offer lessons for international cooperation.

“The RCEP is a huge, potentially powerful agreement among rich and poor countries that complements each other’s strengths,” Peter Petri, a professor of international finance at Brandeis University in the United States, told China Daily.

“For example, it has favourable rules for parts and components trade, and these could help developing members benefit from partnering with more advanced countries, making the region a haven for some of the world’s most efficient supply chains,” he said.

“If its potential is realised, the RCEP would create larger markets and innovative, affordable products for the world economy,” he added.

Signed in November last year by 15 Asia-Pacific economies, all 10 member states of the Association of Southeast Asian Nations, China, Japan, South Korea, Australia and New Zealand, the agreement has created the world’s largest free trade bloc that accounts for about one-third of the global population and gross domestic product.

It will take effect in 10 member states – Brunei, Cambodia, Laos, Singapore, Thailand, Vietnam, China, Japan, New Zealand and Australia – on Jan 1, and for the other five members 60 days after official deposition of ratification, acceptance or approval. South Korea will see it take effect on Feb 1.

According to a recent study by Petri and Michael Plummer, a professor of international economics at Johns Hopkins University, the RCEP is estimated to increase world trade by nearly US$500bil (RM2 trillion ) annually by 2030 and raise world incomes by US$263bil (RM1 trillion) annually.

“There are several aspects of the agreement that will lead to significant economic effects, even if the RCEP is not as ambitious in scope as, say, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership,” Plummer told China Daily.

“For example, it will create harmonised, cumulative rules of origin for intra-RCEP trade, which should give a boost to regional supply chains, at a time when supply chains are facing headwinds,” he said.

The agreement will lower tariffs on about 90% of traded commodities. — China Daily/ANN