The Regional Comprehensive Economic Partnership (RCEP) trade pact, once signed, will act as a meaningful symbol of trade liberalization and multilateralism, not only in the region but also in the world, said a Vietnamese scholar.
Vo Tri Thanh, former deputy head of Vietnam’s Central Institute for Economic Management, told Xinhua in a recent interview that the current progress of concluding the mega free trade agreement demonstrated the firm commitment of the Association of Southeast Asian Nations (ASEAN) and its partners to upholding an open, inclusive and rule-based multilateral trading system.
In the 36th ASEAN Summit Chairman’s Statement released on Saturday, leaders of the member countries welcomed the progress made for the full conclusion of the negotiations of the RCEP and looked forward to the signing of the deal by the end of 2020.
Earlier on June 23, economic ministers of the 10 ASEAN member states as well as China, Japan, South Korea, Australia and New Zealand have reaffirmed their commitment to signing the pact this year.
Thanh believed that the deal will be signed by the end of this year given the determination of participating countries.
The RCEP, initiated by ASEAN in 2012, is a proposed free trade agreement (FTA) between the 10 member states of the association and its six FTA partners — China, Japan, South Korea, Australia, New Zealand and India.
According to Thanh, the signing of RCEP will be especially meaningful, given the context that trade protectionism has been rising in the past five years, colliding with the trend of trade liberalization and globalization.
“It will act as a manifesto that regardless of difficulties and complex developments, RCEP participating countries still keep faith in free trade, support it and proceed it with optimism, and that deepening connectivity is still the main trend in the region and the world,” said the expert.
As a free trade agreement, RCEP matters in the way it synchronizes the progress of integration and development in the Asia Pacific, which is a step towards the formation of the Free Trade Area of the Asia-Pacific (FTAAP), Thanh said.
In the newly released 36th ASEAN Summit’s Chairman Statement, the leaders underscored the importance of free trade agreements like RCEP in transforming the region into a global ASEAN, in contributing to the post-pandemic recovery and in creating resilient supply chains.
Amid unprecedented challenges posed by the COVID-19 pandemic, the free trade agreement is expected to boost participating countries’ growth, trade and investment, businesses and employment, among others.
Once signed, the RCEP will be the world’s largest free trade bloc, accounting for 45 percent of the world population, 40 percent of global trade and around one-third of the world’s gross domestic product (GDP).
RCEP’s large market size and strong trade and investment linkages between the ASEAN and its dialogue partners suggest that any small reduction in trade barriers, which the deal focuses on, will significantly increase trade benefits, Vo Dai Luoc, former head of Hanoi-based Institute of World Economics and Politics under the Vietnam Academy of Social Sciences, told Xinhua.
“These benefits will then transform into greater amounts of jobs created, and thus lead to increased GDP and poverty reduction in emerging ASEAN economies such as Cambodia, Laos and Myanmar,” Luoc said.
As trade barriers are lowered and market access for goods and services are improved, ASEAN will become more attractive to foreign companies that want to participate in a more integrated area.
“This will enhance transparency in trade and investment, as well as facilitate small and medium-sized businesses of the ASEAN to participate in global and regional supply chains,” the expert added.
By the implementation of RCEP, the ASEAN can help reconnect the regional and global supply chain, which was disrupted by the COVID-19 pandemic, through which the bloc can affirm its role in the regional and the world economy.
“Being the ASEAN Chair 2020 and a strong advocate of the free trade deal, Vietnam will definitely be benefited from it with immediate impacts,” he said.
According to the expert, RCEP will hand Vietnamese businesses the opportunity to boost exports, participate in new value chains and attract more foreign investment. The import tax cuts will open up new opportunities for products from prominent sectors such as telecommunications, information technology, textiles and footwear, and agriculture.
Echoing Luoc’s view, Thanh further commented that RCEP joining will urge ASEAN countries to step up reforms and innovations, as well as to improve investment and business environment.
“To investors, an ASEAN economy is much more attractive when it is placed as part of the mega regional production value chain, instead of standing alone,” the expert said.
Thanh also said China has stood out as an important trade partner of ASEAN, and an active player committed to pushing forward the negotiations.
“Together with the ASEAN’s role in constructing a cooperative institutional base, China’s role is very important to the signing and implementation of RCEP,” Thanh said. Xinhua