Fifteen Asia-Pacific ministers signed a massive free trade deal on November 15, as part of the four-day ASEAN summit, held virtually.
The Regional Comprehensive Economic Partnership (RCEP), first proposed in 2012, brings together the 10 ASEAN economies, as well as China, Japan, South Korea, New Zealand and Australia.
RCEP builds on existing free trade deals among member countries. It will broaden and deepen economic links across the Asia-Pacific, ease trade in goods and services, facilitate the flow of foreign investments, and enhance protections in areas such as e-commerce and intellectual property.
The agreement will also eliminate tariffs for at least 92 per cent of goods, with additional preferential market access for exports. The flow of goods will also be faster.
More companies will be able to provide services in the region, with foreign shareholding limits raised for at least 50 subsectors including professional services, telecommunications and financial services. Businesses will also find it easier to navigate and integrate into regional value chains.
The RCEP will come into force when six ASEAN countries and three non-ASEAN countries have ratified it.
Terms of the deal were agreed upon by the 15 RCEP countries last year. However, this resulted in India’s pullout, who was worried that the elimination of tariffs would open its markets to a flood of imports that could harm local producers. Other countries have reiterated the door remains open to India.
According to The Straits Times, Singapore’s prime minister Lee Hsien Loong, said: “The RCEP is a major step forward for the world, at a time when multilateralism is losing ground and global growth is slowing.”
“It signals our collective commitment to maintaining open and connected supply chains, and to promoting freer trade and closer interdependence especially in the face of Covid-19 when countries are turning inwards and are under protectionist pressures,” he said.
In the same article, Asean secretary-general Lim Jock Hoi told The Straits Times that the RCEP will ensure markets are kept open, and provide much-needed certainty and stability for businesses as they cope with the Covid-19 crisis.
“The signing of the RCEP agreement at this time… is a demonstration of the region’s strong commitment to open, inclusive, and rules-based multilateralism and confidence of the contribution of trade to post-pandemic recovery efforts,” he said.