The RCEP agreement creates a free trade arrangement between ASEAN and Asia-Pacific nations, providing new trading opportunities through tariff reduction, new rules of origin, and trade-facilitation measures. Article by Dezan Shira as part of May China Briefing
In November 2020, after eight years of negotiation, the Regional Comprehensive Economic Partnership (RCEP) Agreement was finally inked by 15 Asia-Pacific nations, by far becoming the largest plurilateral free trade agreement (FTA) in the world.
The signatory countries to the RCEP – 10 ASEAN countries as well as five non-ASEAN countries, China, Australia, New Zealand, Japan, and South Korea – cover nearly one third of the world’s population, one third of the global GDP, and one third of the world’s total exports. The bloc is also the fastest growing and most promising investment region in the world.
Once ratified by at least six ASEAN countries and three non-ASEAN countries, equivalently three fifths of all the signatories, the RCEP agreement will enter into force in 60 days. Analysts expect that could happen in the second half of 2021 or early 2022.
How significant is the RCEP agreement?
Despite the RCEP’s sheer size, opinions vary as to how significant it truly is. In fact, prior to the RCEP, most of its member countries have already existing bilateral FTAs – according to The Economist, of the 2.3 trillion in goods flowing between RCEP signatories in 2019, 83 percent passed between those that already have a trade deal.