RCEP: What it is and what it isn’t

AN interesting story in yesterday’s (November 23) business section suggested that last week’s objectively good news about the signing of the Regional Comprehensive Economic Partnership (RCEP) may not result in as big an economic boost as some sectors anticipate. That is a reasonable take on it, all things considered, but because the RCEP still appears to be a mystery to most people, it is probably worthwhile to discuss what the agreement is and who actually stands to benefit from it.

The RCEP was introduced and aggressively promoted by China during the past eight years that it has been under negotiation by the countries involved, which are the ten member-states of the Association of Southeast Asian Nations (Asean), China, Japan, South Korea, Australia and New Zealand. India was originally part of the regional trade pact, but withdrew last year as tensions between it and China have increased. As it is, if the RCEP is fully ratified by the 15 signatories, it will create the world’s largest free trade agreement, accounting for about 28 percent of global trade, about 23 percent of global inward foreign direct investment (FDI) — i.e., investment from other countries into countries that are a part of the RCEP — and about 34 percent of global outward FDI.