Important Consequences of Implementation of Regional Comprehensive Economic Partnership

2022/01/18 | Economy, interview, top news

Strategic Council Online - Interview: A professor at Allameh Tabataba’i University, saying that the RCEP agreement is the largest free trade pact in the world, noted: The world in 2030 will be faced with a very strong and unified economic hub that could play an impressive role in global economic, political, and security fields.

Speaking in an interview with the website of the Strategic Council on Foreign Relations, Dr. Mitra Rahenejat, while announcing the launching of the RCEP agreement, said: The Regional Comprehensive Economic Partnership (RCEP) is the world’s largest free trade agreement, which started implementation since the beginning of 2022 and is covering 30% of the world population with a market of more than 26 trillion dollars.

Role and importance of RCEP agreement

Emphasizing the importance and role of the economic agreement, she added: It seems that the agreement covers 20 chapters related to trade in goods and services, relocation of people, investment, intellectual property, e-commerce, competition, government procurement and settlement of disputes, provides new trade and investment opportunities for the member countries.

The faculty member of the Department of Political Economy and Public Policy, Faculty of Law and Political Science, Allameh Tabataba’i University, recalled that according to analysis the economic effects of the treaty would not show quickly and that it would take several years for its economic benefits to become apparent, saying: Currently, the member states of the agreement should make utmost efforts to implement the provisions of the treaty in the areas of planning to reduce customs duties, optimize the supply chain, non-tariff measures, trade facilitation and transparency.

Rahenejat, referring to the effects and consequences of the full implementation of the RCEP agreement, added: After the implementation of the agreement, the ground will be prepared for trade of 90% of goods produced by member countries under this agreement, which will include zero tariffs over time, and because business practices will be simplified, we will face a facilitated trade flow in the service-investment sector.

China’s active role in preparing for implementation of RCEP

The university professor continued: Member states of the agreement have a key role in paving the way for the implementation of the provisions and accelerating the use of the existing opportunities, and at the top of them stands the Chinese government, which is preparing local industries and companies by full planning to take advantage of those opportunities.

Describing the political, regional and economic implications for the implementation of the agreement, she said: As the world’s largest free trade agreement, it is even larger than other regional trade blocs, such as the US-Mexico-Canada Agreement (USMCA) and the European Union. In fact, the RCEP is a geopolitical victory for China at a time when US economic influence in Asia and the Pacific has waned.

Noting that the agreement represents the victory of the middle powers, the ASEAN Group, she said China and Japan are not really its architects, adding: By joining the agreement and being patient in the face of the ASEAN Group’s eight-year diplomacy, China seeks to strengthen and develop its relations with its neighbors, and given its economic strength, it will certainly benefit more than the other members of the agreement.

The faculty member of Allameh Tabataba’i University said: The agreement will be the main and accelerating factor in the negotiations of China-Japan-South Korea trilateral free trade agreement, which has been closed for years, and within the framework of the agreement, the trilateral negotiations will be revived.

Referring to India’s membership as China’s economic rival in 2019, she continued: This joining is fraught with fears, and although parts of the Indian economy such as the pharmaceutical, cotton and service industries will benefit from the agreement, but other sectors like agriculture, are not able to compete with China, and it is very likely that the Indian market will be captured by China.

 

Strengthening efficiency of economy of North and Southeast Asia

Rahenejat said that under the agreement, the economies of North and Southeast Asia will become more efficient and their strong points will be linked in technology, production, agriculture and natural resources, adding: Although this agreement strengthens the production chain in the region, it also has political sensitivities. In this regard, the weakness of intellectual property laws is significant. The agreement does not, in principle, provide a framework for labor, the environment, or state-owned enterprises.

According to the professor, since Southeast Asia has already signed a free trade agreement with the members of the agreement, it will benefit more than the Northeast Asian countries, which have raised initial estimates of 19 billion dollars in profits by 2030.

She continued: The agreement can improve access to the budgets of the One Belt One Road project and increase market access by strengthening transportation, energy and communications. It is also possible to attract more foreign investment if there are favorable laws of origin. In addition, given the various economic dimensions of the agreement, it can be expected that the world in 2030 will face a highly powerful and integrated economic hub that can play a significant role in the global economic-political-security arena.

Important role of RCEP in future

Referring to the important role of the agreement in the future, Rahenejat said: With China’s presence in the agreement, the weakened position of the United States in the East Asian economy and the rise of the ASEAN countries, we are facing a changing situation in East Asia. In this change, we will see an increase in the economic power of the East Asian regions compared to other parts of the world, which due to the high volume of s China’s investment in the member countries in the face of the unfavorable and strict US approach for investment and economic cooperation in the region, it can be said that China will have the upper hand over the United States in this region.

At the same time, she stressed: It should be noted that the soft power of the United States in the countries member in the agreement is much greater than China, and with the change of US economic approach in the region, expansion of economic relations of people with people, strong US military presence in the countries member in the agreement, superiority of China’s economic position over the United States in the region will be further challenged.

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