RCEP should actively leverage the threshold of multiple dividend integration effects | economy | effects

The Regional Comprehensive Economic Partnership (RCEP) is currently the largest free trade area in terms of global population, economy, and trade in goods. The ten ASEAN countries, along with China, Japan, South Korea, Australia, and New Zealand, have jointly ushered in a new era of economic cooperation in East Asia. On January 1, 2022, RCEP reached the entry into force threshold and officially came into effect in approved countries. On June 2, 2023, RCEP came into effect for the Philippines, the last country to ratify, and thus RCEP became fully effective for fifteen countries.

RCEP has integrated 27 bilateral and multilateral trade arrangements and 44 investment agreements in the region, forming a comprehensive, modern, high-level, and mutually beneficial free trade agreement. For the first time, China, Japan, and South Korea have been "framed" in a free trade zone. The national conditions of the fifteen RCEP countries vary greatly, with significant differences in natural endowments, economic size, and development levels among them. RCEP reflects the current trend of countries committed to promoting peace, cooperation, and win-win development. In the face of adverse globalization, it has injected strong positive energy into promoting the construction of an open world economy and accelerating global post pandemic recovery. RCEP has shown strong trade dividends, industrial dividends, institutional dividends, development dividends, etc. All parties should work together to leverage the integrated effects of many heavy dividends.

Multiple dividends gradually emerge

Fully leverage the advantages of tariff reduction and trade liberalization and facilitation, leverage the fundamental role of trade dividends, and expand the large market in East Asia. The promotion effect of trade growth is the most realistic and visible dividend of free trade agreements.

After the RCEP officially takes effect, over 90% of goods trade between member countries will be subject to zero tariffs. Since its effectiveness on January 1, 2022, RCEP has brought steady growth in intra regional trade. In 2022, China's trade volume with 14 other RCEP member countries reached 12.95 trillion yuan, a year-on-year increase of 7.5%, accounting for 30.8% of China's total foreign trade that year. Among them, in 2022, China's trade volume with ASEAN reached 6.52 trillion yuan, a year-on-year increase of 15%, accounting for 15.5% of China's foreign trade. ASEAN's position as China's largest trading partner has been further consolidated. In the first quarter of 2023, China's imports and exports to the other 14 RCEP member countries amounted to 3.08 trillion yuan. The import and export growth to Singapore, Laos, and Myanmar reached 45.8%, 37.8%, and 29%, respectively. The overall trade of other RCEP member countries is showing a good development trend. The trade of Southeast Asian agricultural products, seafood, and Australian dairy products is growing rapidly, and the large market effect in East Asia continues to emerge.

Fully leverage the comparative advantages of various countries, utilize the rules of origin accumulation, and build a high-quality industrial chain in East Asia with global competitive advantages. The differences in development levels among RCEP member countries objectively form a unique development potential for the region. Each country can participate in the regional production system based on comparative advantages, such as raw materials, technology, capital, labor, and processing and manufacturing capabilities.

At present, about 50% of the trade within the RCEP region is intermediate goods trade, and members have close connections in the industrial and supply chains. The RCEP rules of origin accumulation have promoted the rapid growth of intermediate goods trade, and the integrated development and integration effects of regional industrial chains and value chains are increasingly evident. We have seen that many enterprises have started to implement cross-border layout and integration of production links based on the comparative advantages of different member countries. This will promote the continuous improvement of regional economic integration, further consolidate the existing production network in East Asia, enhance the resilience of the entire regional industrial and supply chain, and be conducive to further enhancing the competitive advantage of East Asia in the global production networks of North America, East Asia, and Western Europe.

Benchmarking against international high standards such as the Comprehensive and Progressive Trans Pacific Partnership Agreement, continuously improving openness and liberalization levels, and creating new institutional dividends.

The first dividend of the RCEP system is to promote the effective implementation of various convenient and preferential policies under existing rules. All parties should strengthen policy coordination, promote regional regulatory integration, reduce institutional costs, and effectively improve the business environment. In the context of rapid development in contemporary artificial intelligence, the Internet of Things, big data, and other fields, it is necessary to strengthen the development of emerging fields such as e-commerce and data trade, promote deep cooperation among member countries in data infrastructure, cross-border e-commerce, smart cities, big data, 5G applications, and other fields, and give full play to the exemplary and leading role of existing cooperation achievements. RCEP benchmarking against high standard free trade agreements such as CPTPP and Digital Economy Partnership Agreement is the next major direction for all parties to strive for. China proposes to accelerate institutional openness, promote the integration of rules and regulatory standards, and create more development opportunities for member states.

Adhere to the principles of gradual progress and inclusiveness, enhance the development capacity of underdeveloped countries, and ensure the welfare improvement and overall balance of interests that all parties should have.

RCEP reflects the well-known characteristics of the "ASEAN approach", which involves establishing a good mutual trust mechanism through full consultation, respecting the equal status of all parties, fully considering the concerns and differences of all parties, and demonstrating the necessary inclusiveness through gradual change. RCEP adheres to the principle of balancing interests and fully considers the interests of all parties, providing transitional arrangements for underdeveloped members. At present, all member countries of RCEP can achieve overall welfare improvement and growth, and RCEP is creating vivid examples of shared development opportunities among participating countries.

Promote the effective release of dividends

The achievement and full implementation of RCEP were not easy, and all parties should cherish it even more. In the current context of Western countries such as the United States promoting decoupling and chain breaking, RCEP focuses on promoting the realization of "strong chain", "extended chain", and "supplementary chain" in the local area, becoming the biggest highlight of promoting global economic recovery, and its effectiveness will also benefit the world. The acquisition of multiple benefits from RCEP requires member states to strengthen communication, enhance mutual trust, and promote cooperation, especially to jointly resist the interference that may be brought about by external forces through non market forces.

The RCEP multiple dividends themselves are not isolated but highly correlated. Trade dividends are the foundation of other dividends, and industrial dividends rely on trade dividends. The institutional dividend is a high-level expansion of trade dividends and industrial dividends, which in turn continuously enhance trade dividends and industrial dividends. For the release of RCEP dividends, attention should be paid to handling the relationship with other free trade agreements and bilateral and multilateral cooperation frameworks in the region, especially giving full play to the role of China ASEAN Free Trade Area Agreement and China and relevant countries in co building the "the Belt and Road".

Firstly, it is necessary to promote and guide the existing rules of RCEP, so that all domestic market entities of each member can truly understand and use them well. RCEP involves various aspects such as market openness, rules of origin, trade facilitation, technical standards, and intellectual property. Among them, rules of origin are highly specialized and require strengthened training and guidance.

Secondly, we need to strengthen institutional construction and negotiate the establishment of the RCEP Secretariat as soon as possible. Ensure the central position of RCEP in various economic and trade agreements in the region, and promptly address any issues encountered during implementation. Establish specialized working mechanisms such as RCEP related industry alliances to accelerate the development and release of cooperation potential brought by multiple dividends.

Finally, we need to promote the integration of RCEP and the 3.0 version of the China ASEAN Free Trade Area, creating a linkage effect. The China ASEAN Free Trade Area 3.0 version, which is currently under discussion, will promote greater openness in the fields of digital economy, green economy, service trade, and investment. The China ASEAN Free Trade Area 3.0 version is conducive to further upgrading RCEP.

It is worth mentioning that in the past 10 years, ASEAN related countries have actively participated in the construction of the "the Belt and Road" and achieved fruitful results. For example, the opening and operation of the China Laos Railway has transformed Laos from a "land locked country" to a "land linked country", greatly improving the conditions for Laos' foreign trade development. At present, the infrastructure improvement and connectivity improvement brought about by the "the Belt and Road" cooperation are narrowing the development gap between the underdeveloped countries in Southeast Asia and other countries in the region, which will greatly enhance the profitability of the underdeveloped countries in participating in RCEP.