According to a recent media report, participating countries are expected to sign the Regional Comprehensive Economic Partnership (RCEP), a mega trade pact, in November 2020.
On Nov. 4, 2019, 15 of the 16 potential member states of the RCEP concluded negotiations on market access in a meeting held in Bangkok, the capital of Thailand. The only country that did not sign the terms that day was India.
The RCEP is a proposed free trade agreement (FTA) between the 10 member states of the Association of Southeast Asian Nations (ASEAN) (namely Indonesia, Thailand, Singapore, the Philippines, Malaysia, Vietnam, Brunei, Cambodia, Myanmar and Laos) and their trade partners Australia, China, Japan, New Zealand, India and the Republic of Korea.
RCEP negotiations were formally launched in 2012. After more than 20 rounds of arduous consultations over the past years, success is now looming. In my view, the substantial, hard-won progress made on the RCEP should be fully cherished by all member states and even the whole world.
With a total population of about 3.5 billion, the RCEP will have a combined GDP of more than US$23 trillion, accounting for more than 30 percent of global trade. If the trade pact is finalized, it will become the world’s largest regional FTA. Its significance is even more prominent in light of the trend taking place in some parts of the world that are seeing or considering a return to protectionism and unilateralism. Against the backdrop of increased downward pressure on the global economy and rising protectionism and unilateralism, it is important to reach a comprehensive, high-level and mutually beneficial FTA, to support the reform of the World Trade Organization (WTO), and to protect fair trade as well as globalization.
The RCEP is beneficial not only to China, but also to the Asia Pacific region and the world as a whole.
China’s Ministry of Commerce said that the country’s annual foreign trade volume is likely to hit a new high if the pact is signed this year. Moreover, participation in the RCEP will be an important approach for China to diversify and optimize its export structure and offset the impacts from the Sino-U.S. trade frictions, thus stabilizing its foreign trade in the short term. In the long run, the bloc is expected to promote China’s high-level opening up and further its involvement in regional integration.
The RCEP will also bring benefits to the Asia Pacific region. Once the agreement is settled, tariff and non-tariff barriers among all of its member states will be removed, which will help stabilize foreign trade and investment and create more opportunities for every party involved. Meanwhile, with an integrated market, the RCEP will be more attractive and competitive in partnering for changes and engaging with the world.
More importantly, the RCEP will stir up the sluggish global environment, boost global economic expectations, deepen regional integration and facilitate equitable economic development all over the world. It will also enable the deeper integration of industrial chains and provide fresh momentum for the world economy.
In another development, India is now the only country that is swaying on whether to sign the agreement. Analysts said the South Asian nation was worried that opening its economy would undermine its already fragile domestic agricultural and industrial bases. The country was also concerned that its domestic market may bear the brunt of China’s exports, leading to a widened trade deficit that would have side effects on its economy once the RCEP treaty is concluded.
All parties understand India’s concerns, and the door is always open to it for further negotiations. A treaty without India is still a treaty, but it would be a pity, since if India does not sign the RCEP, the population and trade volume covered by the treaty will be 37 percent and 7 percent less than what it could be, respectively.
As an important mediator in the bloc, China has shown its willingness to resume talks with India at any time and at any place, in order to reach a mutually beneficial agreement. As for India, it should strike a wonderful balance between short-term loss and long-term gain. By joining the bloc, India can successfully transform and upgrade its economic structure at an affordable price, thus gaining a lot for its future. But if India refuses to join, it will be excluded from the integrated Asia Pacific FTA which includes China, its biggest trading partner in the world.
(The author is the editor-in-chief of the Shenzhen Daily with a Ph.D. from the Journalism and Communication School of Wuhan University.)