KUALA LUMPUR (Dec 31): The Regional Comprehensive Economic Partnership (RCEP) is set to take effect from Jan 1, 2022 to create the world's largest free trade zone in terms of trade volume or population.
The RCEP covers a market amounting to 30% of the world's gross domestic product.
In a report on Thursday (Dec 30), the Global Times, an official Chinese Communist Party mouthpiece, said Chinese government officials had announced a piece of news that not only brings hope after a year battered by the Covid-19 pandemic, but also marks “a victory of multilateralism and boosts trade prospects for countries in the Asia-Pacific region”.
It said from customs officials and entrepreneurs to academics, China had been gearing up for the start of the mega trade pact, which will see tariffs end on more than 90% of the commodities traded in the region either immediately or in stages, with companies under the RCEP umbrella holding high hopes for incremental investment and trade as a result of the agreement.
The agreement will come into effect initially for 10 countries — six ASEAN economies, including Laos, Thailand and Singapore, as well as four non-ASEAN members, namely China, Japan, New Zealand and Australia.
In total, 15 Asia-Pacific countries signed the RCEP agreement in late 2020.
Citing Indonesian Ambassador to China Djauhari Oratmangun, the Global Times quoted the diplomat as saying with full implementation of the RCEP, trade facilitation cooperation will improve.
High expectations
The report said officials and companies mostly saw the tariff decrease as the main benefit brought by the event, and many are also looking to maximise economic gains from the free trade agreement through increased market openness and investment as well as government efforts to ensure smooth implementation of the deal, including logistics coordination.
It said China is also actively pushing for expansion of free trade zones, which usually contain logistics facilities such as warehouses.
Economic catalyst
The Global Times said that from boosting trade and stimulating investment to driving services and industrial cooperation, both experts and government officials are holding high hopes for gains that the agreement will bring to the Asia-Pacific economy — now that the agreement provides a regional framework under which businesses will be carried out in a more economically efficient manner.
The report cited experts as saying that China could become an engine for the global economic recovery after the implementation of the RCEP, given that the pandemic situation will ease in 2022.