RCEP set to help support global recovery and create 2.8 million jobs

The Comprehensive Regional Economic Partnership Agreement, which enters into force today, is expected to significantly boost regional and global economies and offer lessons for international cooperation.

The trade pact will increase regional revenues by 245 billion dollars and create 2.8 million jobs, economists estimate.

“RCEP is a huge and potentially powerful agreement between rich and poor countries that complements each other’s strengths,” Peter Petri, professor of international finance at Brandeis University in the United States, told China Daily.

“For example, it has favorable rules for parts and components trade, and these could help developing members benefit from partnerships with more advanced countries, making the region a safe haven for some of the supply chains. most efficient in the world, ”he said.

“If its potential is realized, RCEP would create larger markets and innovative and affordable products for the global economy,” he added.

Signed in November of last year by 15 Asia-Pacific economies, the 10 member states of the Association of Southeast Asian Nations, China, Japan, South Korea, Australia and New Zealand, the deal created the largest free trade bloc in the world, accounting for around one-third of the world’s population and gross domestic product.

It will take effect in 10 member states (Brunei, Cambodia, Laos, Singapore, Thailand, Vietnam, China, Japan, New Zealand and Australia) on January 1 and for the other five members 60 days after the official deposit of the ratification, of acceptance or approval. South Korea will see it come into effect on February 1.

According to a recent study by Petri and Michael Plummer, professor of international economics at Johns Hopkins University in the United States, RCEP is expected to increase global trade by nearly $ 500 billion per year by 2030 and increase revenues. worldwide by $ 263 billion per year.

“Several aspects of the agreement will have significant economic effects, although the RCEP is not as ambitious in scope as, say, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership,” Plummer told China Daily.

“For example, this will create harmonized and cumulative rules of origin for intra-RCEP trade, which should give a significant boost to regional supply chains, at a time when supply chains face challenges. headwinds, ”he said.

The deal will cut tariffs on about 90 percent of traded commodities and reduce some non-tariff barriers to trade in goods and services, according to Plummer. “It is important to note that this will create a free trade area between the Northeast Asian economies of China, Japan and South Korea, giving a particularly strong boost to trade and production in the field of advanced manufacturers, “he added.

The two economists’ study, published by the East Asian Economic Review, estimates that RCEP is expected to increase regional revenues by $ 245 billion permanently and create 2.8 million jobs in the region, which Plummer said. described as “a significant boost”.

“In addition to its salutary effects on world income and trade, the RCEP offers a significant boost to the opening of international markets, with very few negative effects on external economies in the form of trade diversion”, Plummer said.

In addition, RCEP shows how developed and developing countries can work together to include the interests of countries at all levels of economic development, he said.

“This could contain important lessons for the WTO, which has found itself at an impasse with the Doha Development Agenda in large part because it has not been able to take sufficient account of the interests of the developed and developing economies, ”Plummer said.

Petri also noted that the success of RCEP will depend on how countries with different systems work together to ensure the success of the agreement.

“If the benefits are widely shared and the relationship is positive, members will fully implement the agreement and may even expand its scope,” he said. “RCEP could become a model of cooperation in an unusually diverse economic region. “

  • Keywords: global recovery, RCEP
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