Eliminate 91% of commodity tariffs, covering an output market of 26.2 trillion US dollars!

The governments of New Zealand and Australia announced on the 3rd that the two countries have completed the domestic approval process for the Regional Comprehensive Economic Partnership Agreement (RCEP). This indicates that the "milestone" conditions for RCEP's entry into force have been reached.

On the evening of the 3rd, the Ministry of Commerce of China announced that: On November 2, the ASEAN Secretariat, the depository of RCEP, issued a notice announcing the six ASEAN member states including Brunei, Cambodia, Laos, Singapore, Thailand, and Vietnam, as well as China, Japan, New Zealand, and China. Australia and other four non-ASEAN member states have formally submitted the approval letter to the ASEAN Secretary-General, which has reached the threshold for the agreement to enter into force. According to the agreement, RCEP will take effect for the ten countries mentioned above on January 1, 2022.

The RCEP negotiation was initiated by the 10 ASEAN countries in 2012 and invited six dialogue partner countries from Australia, China, India, Japan, South Korea, and New Zealand to participate. The third RCEP leaders meeting was held in Bangkok, Thailand in November 2019 and issued a joint statement, announcing that 15 countries except India have concluded all textual negotiations and substantially all market access negotiations. In November 2020, 15 RCEP member states formally signed the agreement. According to the agreement, RCEP can be mutually effective between these approved countries after 6 ASEAN member states and 3 non-ASEAN member states are approved.

On March 22 this year, the head of the International Department of the Ministry of Commerce of China stated that China had completed the approval of the RCEP agreement and became the first country to ratify the agreement. On April 15, China formally deposited the RCEP approval letter with the Secretary-General of ASEAN, marking China's formal completion of the RCEP approval procedure. On April 28, the Plenary Session of the Japanese Senate passed the RCEP.

The New Zealand Ministry of Trade issued a statement on the 3rd, announcing that the country has approved RCEP, "from the beginning of next year, enterprises will be able to take advantage of the opportunity of RCEP." The Australian Department of Foreign Affairs and Trade also issued a statement saying that the RCEP is determined to take effect on January 1 next year, because Australia and New Zealand have completed the approval procedures for the agreement. "RCEP will take effect 60 days after the approval of at least 6 ASEAN countries and at least 3 non-ASEAN countries. The milestone (condition) was reached on November 2, 2021, and RCEP was approved by Australia and New Zealand, which will be approved by Australia and New Zealand in 2022. The entry into force on January 1 paved the way.” The statement said, “Australia has approved RCEP to ensure that our farmers and businesses can benefit from the world’s largest free trade agreement.”

Japan’s Kyodo News Agency said on the 3rd that, despite the absence of the United States, RCEP is still the world’s largest free trade agreement. “This will also be the first trade agreement that Japan has joined to include China and South Korea.” The Japanese government estimates that RCEP can increase Japan's GDP by about 2.7%. According to reports, RCEP aims to eliminate 91% of tariffs on goods between member states and standardize trade rules such as investment, intellectual property and e-commerce.

"The world's largest trade agreement will take effect in January next year, and the United States will not participate." The US CNBC website stated on the 3rd that RCEP covers the world's 2.2 billion people and a US$26.2 trillion output market. The partnership will create a trading group covering approximately 30% of the world’s population and the global economy, which is larger than other regional trading groups such as the United States-Mexico-Canada Agreement (USMCA) and the European Union. The report also said sourly that analysts said that the economic benefits of RCEP are not large, and it will take several years to realize. "Nevertheless, the agreement is still widely regarded as China's geopolitical victory at a time when the United States' economic influence in the Asia-Pacific region has weakened."

The Nikkei Asian Review stated on the 3rd that RCEP will create a super-large trading group covering approximately 30% of the world’s GDP and population. Once it enters into force, the agreement will abolish about 90% of the commodity trade tariffs between the signatory countries in the next 20 years. For companies around the world, RCEP may become an incentive for investors to invest in various member states. Companies can export products duty-free to markets such as China, South Korea, and Japan, while manufacturing products in member countries where labor is relatively cheap, which will greatly offset the additional logistics costs. According to the report, RCEP is unique in that it is the only multilateral free trade agreement that includes China. "But this situation may change soon, because Beijing has formally submitted an application to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP)." According to the report, CPTPP’s trade rules are much more liberal than RCEP. Therefore, it is vital that RCEP be approved and take effect quickly. "If China eventually becomes a member of the CPTPP, the two agreements may start to become similar."