• The Regional Comprehensive Economic Partnership is the world’s largest trade pact in terms of GDP
• It involves the 10 Asean countries, China, Japan, South Korea, Australia and New Zealand
• The agreement is a “timely boost” in light of the Covid-19 pandemic, Minister for Trade and Industry Chan Chun Sing said
• It has not been ratified yet

SINGAPORE — Fifteen Asia-Pacific economies, including Singapore, on Sunday (Nov 15) put pen to paper on the world’s largest trade agreement — the Regional Comprehensive Economic Partnership (RCEP).

The signing, which was eight years in the making, came at the end of a four-day summit held in Hanoi, Vietnam.

The RCEP includes China, Japan, South Korea, Australia, New Zealand and the 10 members of the Association of Southeast Asian Nations (Asean) — Singapore, Malaysia, Indonesia, the Philippines, Brunei, Vietnam, Laos, Cambodia, Thailand and Myanmar.

The agreement will aim to lower tariffs, open up trade in goods and services, and promote investment to help emerging economies catch up with the rest of the world.

After the signing, Prime Minister Lee Hsien Loong said that the countries have reached a “major milestone” that has taken 46 negotiating meetings and 19 ministerial meetings.

The RCEP is a “major step forward for the world”, consolidating smaller existing agreements “to create a comprehensive partnership agreement in Asia, fit for the 21st century”, he added.

Mr Lee said: “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.”

The signing of the agreement is a “timely boost to the longer-term prospects of the region” in light of the Covid-19 pandemic disrupting global production and supply chains, Singapore’s Minister for Trade and Industry Chan Chun Sing told the media on Sunday.

He said that RCEP will allow the Asia-Pacific region to remain as an attractive investment destination after the pandemic subsides, as well as place it at the forefront of the global economic recovery.

“The after-effects (of Covid-19) will linger for years to come and it will take time for all of us to rebuild our economies and recover from the crisis. Even so, no economy can recover on its own,” Mr Chan said.

“At a time when support for multilateralism is fraying, the RCEP will send a clear statement of the region’s unwavering support and commitment to the multilateral trading system.”

While the pact has not been ratified yet, Mr Chan said all countries in it “need to accelerate efforts” to do so as soon as possible.

The RCEP will potentially provide further opportunities for Singapore’s trade with the 14 other countries, which totalled about half (S$15.2 billion) of Singapore’s global trade last year, he noted.

BACKGROUND

The RCEP was launched in 2012. It comprises about 30 per cent of global gross domestic product (GDP) and about a third of the world’s population.

India was involved in earlier discussions but withdrew last year over concerns about cheap Chinese goods entering the country.

PM Lee said that he, along with the other countries, hopes that India will join at some point “so that the participation in the RCEP will fully reflect the emerging patterns of integration and regional co-operation in Asia”.

When the idea for RCEP was hatched, it was seen as a way for China — Asia-Pacific’s biggest importer and exporter — to counter growing US influence in the region.

At the time, China was not among the 12 members of the “mega-regional” Trans-Pacific Partnership (TPP) led by the US.

In 2017, President Donald Trump withdrew the US from the TPP. It was then renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and it includes seven RCEP members.

The RCEP's market size is nearly five times greater than that of the CPTPP, with almost double its annual trade value and combined GDP.

SIGNIFICANCE OF RCEP

Mr Chan said that everyone has had to make “difficult trade-offs” to advance RCEP negotiations. “At one point, the prospects of concluding the agreement were shaken by geo-political and domestic preoccupations,” he noted.

Nevertheless, with the signing of the pact, he listed several points of its economic significance amid and post-Covid-19:

More preferential market access, notably into China, Japan and South Korea

Simplified customs procedures and improved measures to facilitate trade

At least 65 per cent of services sectors open to foreign participation, with increase in permissible foreign shareholding limits in some RCEP markets

Improved investment rules and disciplines to better support businesses’ regional investments

Consolidation of existing rules into a single rulebook, allowing companies to better take advantage of regional value chains

Emerging trade fields to be pursued under RCEP include e-commerce, intellectual property (IP) and competition policy rights

“For Singapore, the RCEP provides a strong foundation for us to rebuild our economy and overcome the challenges as we emerge from the pandemic together. I look forward to seeing our businesses tap the benefits from the RCEP to support their post-pandemic recovery efforts,” Mr Chan said.

Source: Ministry of Trade and Industry