Massive RCEP trade deal fails in areas where smaller bilateral pacts in Asia-Pacific shine
- Over a half year into the Regional Comprehensive Economic Partnership, trade experts say world’s biggest trade pact serves more to ‘tidy up’ one-to-one agreements
- Bilateral free-trade deal between China and Cambodia is said to be a prime example of how bilateral deals can trump the benefits of RCEP
Seven months after the world’s largest free-trade agreement (FTA) took effect, its critics say that member nations would be better off if they also signed separate bilateral trade deals with each other, because the scope of the regional deal is not comprehensive enough.
Even though the Regional Comprehensive Economic Partnership (RCEP) involves China and 14 other Asia-Pacific nations – covering nearly a third of the global population and about 30 per cent of the world’s gross domestic product – some trade experts say that relying solely on it for trade in the region leaves much to be desired.
“RCEP will not be a game changer for any of its members,” said Stephen Olson, a senior research fellow at Hong Kong’s Hinrich Foundation, which strives to advance mutually beneficial and sustainable global trade. “It is a low-ambition agreement that leaves a significant number of barriers and restrictions.
“Many members already have bilateral FTAs in place that provide the same or a higher level of benefit. The primary upside of RCEP is that it tidies up these various agreements by providing a single umbrella.”
As an example, the Asian Development Bank pointed to an FTA between China and Cambodia. It similarly took effect on January 1, and the bank said the bilateral agreement offers greater advantages in terms of tariff offers. Pramila A. Crivelli, an economist with Asian Development Bank’s Economic Research and Regional Cooperation Department, wrote in a blog post on the lender’s official knowledge platform last month that the bilateral pact between China and Cambodia provides “deeper tariff liberalisation” than RCEP.