RCEP: Integrating Asia beyond trade
- The creation of the world’s largest free-trade-zone under the Regional Comprehensive Economic Partnership represents Asia’s defiance against protectionism for a continued pursuit of economic integration
- Despite wrapped as a trade deal, the key source of gains from RCEP may not actually come from increased trade activity – mainly because most RCEP members already had bilateral free-trade agreements amongst them
- China, Japan and Korea should be the main beneficiaries of reduced trade barriers as RCEP fills the void of free-trade agreements for them. These gains will accrue over time as existing tariffs are phased out
- More important than trade could be the accelerated formation of regional supply-chains. By unifying trade standards – particularly in relation to the Rules of Origin – RCEP could reduce transaction costs and encourage production networks to spread across Asia
- RCEP could also bring geopolitical ramifications to both insiders and outsiders of the pact. Closer economic connections could reduce friction and foster regional stability. The US could see its geopolitical influence weaken in Asia along with reduced economic ties. India may face economic and political marginalisation for not being on the RCEP train, although it could join later
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