Goodbye TPP, hello RCEP and OBOR
In the past-Trans-Pacific Partnership (TPP) area, the RCEP might enter into force 2018 or even later [Update: in November 2020]. The following describes its purpose, after being implemented. Most notable, it will unite China and India in one trade agreement, letting aside controversial viewpoints on the OBOR and AAGC projects.
Regional Comprehensive Economic Partnership (RCEP) is a mega-regional free trade agreement (FTA) between the ten member states of the Association of Southeast Asian Nations (ASEAN) Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam and the six states with which ASEAN has existing free trade agreements (Australia, China, India, Japan, South Korea and New Zealand). The agreement, which includes more than 3 billion people or 45% of the world’s population, is scheduled to be finalized by the end of 2017.
The future of Asian FTAs
The pan-Asian RCEP combines
- ASEAN – Australia New Zealand Free Trade Area
- ASEAN – China Free Trade Area
- ASEAN – India Free Trade Area
- ASEAN – Japan Free Trade Area
- ASEAN – Republic of Korea Free Trade Area
and includes trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement, e-commerce, small and medium enterprises (SMEs) and other issues. The deal lacks the protections for labor, human rights and the environment set by TPP, but it includes, other than TPP, China.
RCEP is consistent with the WTO World Trade Organization and includes provisions to facilitate trade and investment and to enhance transparency in trade and investment relations between the participating countries, as well as to facilitate the participating countries’ engagement in global and regional supply chains.
The RCEP will implement further rules on trade in goods, trade in services, economic and technical cooperation, and especially investment. by this, it aims to create a liberal, facilitative, and competitive investment environment in the region. Negotiations for investment under the RCEP will cover the four pillars of promotion, protection, facilitation, and liberalization. Rules on intellectual property, competition, dispute settlement and other will create a leveled playing field for nearly half of the world’s population.
Implications and side-effects
Most significant implications can be expected with respect to RCEP partners who currently have no free-trade agreement relationships such as China-India, Japan-Korea, and Korea-India. However, the unifying power of the pan-Asian free trade area should have significant effects for all partners involved. A unified FTA will create an equal playing field for ROO (Rules of Origin) requirements, certain regulations and more. And, after the expected death of TPP, RCEP is “the only game in town”.