China is planning to accelerate the conclusion of the Regional Comprehensive Economic Partnership (RCEP) amid its ongoing trade war with the United States. Under the circumstances, China, South Korea, Japan and the 10 ASEAN member countries are predicted to reach an agreement on major issues in November at the latest.
According to industry sources, ministers from a total of 16 countries had a meeting in Singapore from August 29 to September 1, reaching a consensus on government procurement and customs operation. At present, they are in agreement on four out of the 18 chapters of the RCEP, including the previously handled chapters related to small and medium enterprises and economic technology. The remaining agreements are expected to be reached in Singapore in November with China trying to get the upper hand on the U.S. in international trade.
Still, its conclusion within this year is not completely guaranteed. “Although the RCEP is being led by China, it is the ASEAN countries that actually hold the key,” the Ministry of Trade, Industry & Energy explained, adding, “The countries are afraid of opening their markets and an agreement on the degree of their market opening is essential for any progress.”
The South Korean government is in favor of an early RCEP conclusion like China. This is because the RCEP can lead to export market diversification in step with the Moon Jae-in administration’s New Southern Policy. “We are already in FTAs with most RCEP members-to-be like India, China and the ASEAN member countries,” a ministry official said, continuing, “The RCEP is likely to entail more market opening than the existing FTAs and its conclusion can be a boon in terms of market expansion.”
According to the Korea Economic Research Institute, the RCEP will reduce a decline in exports from South Korea and suppress an increase in imports if an additional 25% tariff is imposed on every item traded between the U.S. and China. In addition, South Korea’s GDP is forecast to increase by 16% after the RCEP conclusion.