![]() This could also encourage firms to outsource some production to other countries within the RCEP for cost savings. A unified “rules of origin” system under the RCEP should help reduce time and transaction costs as producers need fill out only one document to certify the origin of their products.The world’s dependence on Asia – and mainland China in particular – for components of all sorts, has only increased simplified trade will mean both Chinese and US importers may import more from third parties such as ASEAN member states.ASEAN members will likely become further integrated into China’s supply chain. ![]() This should help ensure China’s trade with ASEAN member nations continues to outpace trade with other regions. The closer relationship between trade and investment is expected to deepen financial market integration in the Asia-Pacific region.As a result, the systems involved in a cross-border production network will likely become more flexible, helping to enhance productivity, accelerate structural shifts and spur growth across the region in the medium term. The RCEP should foster deeper trade integration – and bring associated economic benefits.This translates into several key implications for investors: The RCEP represents an important step towards broader regional integration within Asia, helping to strengthen the regional supply chain over the medium-term and setting the stage for closer economic integration. The report also predicts that by 2030, the RCEP will boost global GDP by USD 186 billion. China and ASEAN members meanwhile are forecast to see a smaller 0.3% impact. The ASEAN countries, together with South Korea and Japan, will likely find it easier to build their value chains.Īccording to a recent report from the Peterson Institute for International Economics, Japan and South Korea are also the two countries most likely to benefit in real GDP terms, each enjoying a near 1% boost to GDP. But other members within the RCEP may benefit even more. Chinese growth will have global impactĬhina is likely to benefit strongly from the deal, as it will face fewer barriers to exports into the rest of Asia. The RCEP unites the 10 members of ASEAN (Association of South-East Asian Nations) – which first proposed the RCEP idea about a decade ago – along with China, Japan, South Korea, Australia and New Zealand as free trade agreement (FTA) partners. On top of this, the RCEP also sets common trade rules within the bloc. According to the Center for Strategic and International Studies, it will lower tariffs on imports by up to 90% within 20 years. ![]() The pact will progressively remove both tariff and non-tariff barriers on trade in both goods and services. To put this in context, it is bigger than both the US-Mexico-Canada Agreement and the European Union. Significantly, it creates a new economic bloc that covers about a third of the world’s population, and almost a third of global GDP and trade. Following eight years of negotiations, the Regional Comprehensive Economic Partnership (RCEP) was officially signed by 15 Asia-Pacific countries in November 2020. ![]()
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