Facilitating better trade relationships and movements is key to sustaining the global economy. The Regional Comprehensive Economic Partnership (RCEP), is a step in that direction. By creating greater opportunities for free trade across the ASEAN region and corresponding free trade partners, member countries can foster increased economic cooperation through strengthened partnerships, and drive local and regional growth. We dive into the details below:
What is RCEP and its significance?
The RCEP is a free trade agreement between 15 countries, mainly from Asia. Ten of these RCEP members belong to the ASEAN, which include Cambodia, Brunei, Laos, Indonesia, Myanmar, Malaysia, the Philippines, Vietnam, Thailand, and Singapore. The remaining five are ASEAN’s Free Trade Agreement members: China, New Zealand, Australia, Japan, and the Republic of Korea.
This RCEP is the world’s largest free trade pact in Asia, comprising a third of the world’s population and the global GDP, each. It is set to pave the way for strengthening trade and business ties between the RCEP ASEAN and other member countries so that products and services can easily be made available in the region. One of the major moves to support this include the reduction of tariffs on 65% of goods; these will apply to almost 90% of goods over the next 20 years.
It is estimated that RCEP’s share of the world economy could account for half of the estimated US$0.5 quadrillion by 2050, reports the Business Standard.
RCEP and Malaysia
The RCEP trade deal came into force for Malaysia on 18th March 2022, allowing the country to integrate with the largest world trade agreement and enjoy preferential rates, removal of non-tariff barriers, and many other benefits. Although the United States, being the biggest world economy, is not part of this Asian trade pact, according to the International Trade and Industry Ministry, the RCEP will help position the Asia-Pacific region as the new economic hub of the world with the intraregional trade expected to grow by almost US$42 billion.
