The Regional Comprehensive Economic Partnership (RCEP) is a free trade agreement between the Asia-Pacific nations aimed at lowering tariffs, facilitating investment flows and boosting regional supply chains. After 8 years of intense negotiations between 16 countries, RCEP finally entered into force in January 2022 heralding a new era of Asian economic integration.
Key Details
RCEP binds together 10 ASEAN members and their 6 FTA partners under one overarching regional trade deal:
- Signed by all 10 ASEAN countries
- Along with partners China, Japan, South Korea, Australia and New Zealand
- India withdrew from negotiations in 2019
It forms the world’s largest trading bloc covering nearly one-third of global GDP and population.
Genesis
RCEP traces its origins to an ASEAN vision articulated in 2011:
- ASEAN members sought umbrella FTA with 6 partners
- Aim was to consolidate multiple bilateral FTAs
- Provide uniform rules easing cross-border commerce
8 years of step-wise talks addressed priorities of 16 diverse economies. Differing levels of ambition and development initially posed hurdles but members persevered seeing the long term gains.
Key Objectives
Enhance regional economic connectivity and growth on the bedrock of:
- Trade & Investment Liberalization
- Services Sector Opening
- Common Rules Framework
- Supply Chain Resilience
RCEP cements ASEAN centrality in the regional architecture.
Scope & Coverage
RCEP phases down tariffs across goods, services and investment:
Goods Trade
- Tariff cuts on 65-90% traded goods
- Lower import duties for food, auto, electronic items
- Improved market access for agricultural products
Services Trade
- Eased norms for service suppliers to expand abroad
- Streamlined norms in finance, logistics, telecom
- Special carve outs to factor development gaps
Investment Policies
- Transparent and facilitative norms
- Protection against expropriation/discrimination
- Progressive liberalization based on comfort
Intellectual Property Rights
- Standards aligned to global benchmarks
- Checks against biopiracy and unfair use
RCEP integrates past bilateral pacts into consolidated framework.
Implementation & Expansion
The trade deal came into effect in January 2022. New members can also join subject to consensus:
Entry into Force
- ASEAN ratified in 2021 triggering January 2022 activation
- Gradual implementation over 20 years
- Transition flexibility for developing members
Scope for Expansion
- Open for accession by any of ASEAN’s FTA partners
- India can rejoin provided terms acceptable
- Scope to cover additional sectors beyond 2030
RCEP ties regional economies closer through trade.
Benefits & Opportunities
By spurring cross-border commerce, RCEP offers tangible economic dividends:
For Businesses
- Single framework cutting red tape
- Wider customer access abroad
- Cheaper raw material imports
- Chance to integrate into regional supply chains
For Consumers
- Lower cost finished & industrial goods
- Increased choice of services
- Common product standards
For Governments
- Policy reform catalyst
- High quality export boost
- New manufacturing investments
RCEP will boost competitiveness, choice and incomes over the long run.
Challenges
As a multifaceted deal stitching diverse economies, RCEP faces tests in implementation:
Development Gaps
- Varying levels of progress
- Poorer nations may struggle with commitments
Domestic Reforms
- Need complementary policy changes
- Managing job loss fears due to import competition
Non-Tariff Barriers
- Quotas, strict standards beyond tariffs
- May curb actual trade flows
Geopolitical Issues
- Major powers rivalries
- Territorial disputes flaring tensions
Trade pacts inherently involve compromises and sacrifices upfront for later gains. RCEP members will require deft balancing.
Key RCEP Member Country Details
| Country | Population (in millions) | GDP (in trillion USD) |
| ASEAN | 660 | 3 |
| China | 1400 | 14 |
| Japan | 126 | 5 |
| South Korea | 51 | 1.6 |
| Australia | 25 | 1.3 |
| New Zealand | 5 | 0.2 |
RCEP binds world’s largest trading bloc under common rules.
The launch of the RCEP free trade agreement reinforces ASEAN centrality and collective bargaining power in setting the course for Asia-Pacific economic integration.
- Covering nearly one-third of humanity with combined GDP exceeding $26 trillion, RCEP has the potential to emerge as a fulcrum catalyzing post-pandemic regional recovery through trade and investment flows.
- However, stark development divides and worries of industries facing unfair competition pose dilemmas for governments.
- Deft statecraft balancing citizen anxieties and regional leadership compulsion will shape Indo-Pacific geo-economics in the 21st century Asian Century.
