Unctad Report: RCEP Will Give Birth To A New Focus Of Global Trade
A research report recently released by the United Nations Conference on Trade and Development (UNCTAD) pointed out that the Regional Comprehensive Economic Partnership Agreement (RCEP), which will take effect on January 1, 2022, will create the largest economic and trade zone in the world.
According to the report, RCEP will become the largest trade agreement in the world based on the gross domestic product (GDP) of member countries. In contrast, the main regional trade agreements, such as the South American Common Market, the African Free Trade Area, the European Union, the US-Mexico-Canada Agreement, have also increased in the proportion of global GDP.
The report points out that RCEP will have a great impact on international trade, and the economic scale and trade vitality of this emerging group will make it the new focus of global trade. Under the COVID-19 epidemic, the entry into force of RCEP will also help to improve the ability of trade to resist risks.
According to the report, tariff reduction is a central principle of RCEP, and its member countries will realize trade liberalization by gradually reducing tariffs. Many tariffs will be abolished immediately, and other tariffs will be gradually reduced within 20 years. At present, the effective tariffs will be mainly limited to specific products in strategic sectors, such as agriculture and automobile industry. In 2019, the trade volume among RCEP member countries has reached about 2.3 trillion US dollars. The tariff reduction of this agreement will have the effects of trade creation and trade transfer. The low tariff will stimulate the trade of nearly 17 billion US dollars among member countries, and make the trade of nearly 25 billion US dollars shift from non-member countries to member countries. At the same time, it will further promote the export of nearly 2% among RCEP member countries, worth about 42 billion US dollars.
According to the report, RCEP member countries are expected to get different levels of dividends from this agreement. Tariff concessions are expected to have a higher trade impact on the group's largest economy. Due to the trade transfer effect, Japan will benefit most from RCEP tariff reduction, and its export is expected to increase by about 20 billion US dollars. The agreement will also have a substantial positive impact on the exports of Australia, China, South Korea and New Zealand. Due to the negative trade transfer effect, the tariff concessions of RCEP may eventually reduce the exports of Cambodia, Indonesia, Philippines and Vietnam, and some of these economies' exports are expected to turn to other RCEP member countries. Overall, the whole area covered by this agreement will benefit from the tariff preference of RCEP.
The report emphasizes that with the further development of the integration process of RCEP member countries, the trade transfer effect may be amplified, which is a factor that non-RCEP member countries should not underestimate.