The Regional Comprehensive Economic Partnership Agreement or commonly known as RCEP, is one of the world’s largest trade, investment and cooperation partnership. Comprising of ASEAN countries and its five (5) Free Trade Partners (with the exclusion of India), the RCEP was notarised virtually on 15 November 2020 at the 37th virtual ASEAN Summit hosted by Vietnam.
Launched in November 2012, the RCEP began formal negotiations in 2013 with 16 countries, consisting of 10 ASEAN Member States (AMS) and ASEAN’s Free Trade Partners or better known as AFPs. The AFPs involved are Australia, China, India, Japan, Korea, as well as New Zealand. However, in 2019, India announced its withdrawal from the Agreement.
The signing is the culmination of eight (8) years of deliberations involving 31 rounds of negotiations, eight (8) ministerial meetings and four (4) summits.
The Agreement consolidates and amalgamates the existing ASEAN plus one free trade agreement into a single regional trade agreement which ties many overlapping issues in the region. With the aim to establish a modern, comprehensive, high quality and mutually beneficial economic partnership, it is expected to strengthen the regional value chain and contribute to the global economic growth and development. The RCEP participating countries (RPCs) collectively contribute to a total of 30 per cent of the global gross domestic product (GDP) as well as the world population.
Malaysia being part of the new historic partnership, sees plenty of opportunities and benefits that come along with the Agreement. With the recent pandemic experienced globally, RCEP is poised as one of the country’s economic recovery tools in fighting against COVID-19.
The implementation of this Agreement will ensure the continuous opening of markets as well as uninterrupted supply chain.
Malaysian companies are expected to benefit from tariff elimination and reduction of merchandise goods. The single consolidated tariff and rules will facilitate export and import of goods among RCEP countries and strengthen the trade flows.
Service providers, including e-commerce companies and SMEs, will be able to enjoy greater market access in terms of cross border supply and establishing a commercial presence in the RCEP markets.
RCEP also pledges that the negative list approach adopted for both trades in services and investments will provide transparency on rules, laws as well as regulations concerning investments into the country.
While protection, facilitation, liberalisation and promotion of investments in the region are the pertinent elements penned, a chapter on Economic and Technical Cooperation is also included in the Agreement. It focuses on narrowing the development gaps and maximising mutual benefits among the parties through capacity building and technical assistance for RPCs.
The Agreement will enter into force 60 days after six (6) ASEAN member states and three (3) ASEAN dialogue partners submit their instrument of ratification to the ASEAN Depositary.
The RCEP region arises as an important foreign direct investment (FDI) destination with diverse members from developed to less developed countries; creating highly integrated global value chain (GVC) within a highly potential trade and investment bloc, especially during the post-pandemic period.