Some people may not have heard about the Regional Comprehensive Economic Partnership (RCEP) but after years of effort it is making slow but steady progress towards conclusion hopefully next year.
The 23rd round of negotiations on the RCEP took place last week in Bangkok, Thailand. The parties to this proposed trade agreement are the ten-member states of ASEAN plus Australia, China, Japan, India, New Zealand and South Korea. This group makes up 39% of global GDP and covers nearly half the world’s population so it is literally a big deal, but much depends on the quality of the outcome.
RCEP has been a long time coming but RCEP negotiations have intensified this year and progress is being made. Some chapters of the final agreement have been finalised, pending the conclusion of the whole agreement, including, just last week, on Customs and Trade Facilitation. Other areas of the negotiations are proving trickier. The RCEP participants are engaged in bilateral negotiations on market access for goods and services, involving the exchange of requests and offers. It is too soon to say to whether the deal will meet the needs of New Zealand business such as tariff elimination on all key goods items of export interest, based both on tariff lines and value of trade.
The negotiators are fully aware that the RCEP business community expects a final deal which is commercially meaningful and delivers on the standards set out in RCEP’s Guiding Principles for a modern, comprehensive, high-quality and mutually beneficial economic partnership, that fosters and supports regional economic integration. Whether all RCEP parties share the same view of what constitutes “commercially meaningful access” remains to be seen.
That is one reason why it is hard to see the deal being concluded this year. It is more likely that the talks will be “substantially concluded” by late 2018 and for the final deal to be wrapped up around mid-2019. Negotiators are seeking to make as much progress as possible prior to another RCEP Ministerial meeting in late August 2018 at which they will seek fresh instructions.
Given the economic diversity of the RCEP members, it is unlikely that the RCEP will be as ambitious as the Comprehensive Progressive Trans Pacific Partnership (CPTPP). However, given that the RCEP membership constitutes a significant share of global trade, the further liberalisation of trade and investment within RCEP would be a significant economic boost to the region. RCEP gives New Zealand an opportunity to improve on existing trade agreements with RCEP members and to deliver better trade conditions with India.
When considered against the backdrop of rising global trade tensions, the conclusion of the RCEP will be a welcome achievement.
This post was prepared by Fiona Cooper, Associate Director, NZIBF, who attended the Bangkok meeting in her capacity as Vice-Chair of the East Asia Business Council’s RCEP Working Group.