South Korea, China, Japan, Australia, New Zealand and the 10 member countries of the Association of Southeast Asian Nations (ASEAN) provisionally concluded the Regional Comprehensive Economic Partnership (RCEP). The mega free trade agreement (FTA) accounting for one-third of the total GDP of the world is expected to become the world’s largest FTA to keep U.S. trade protectionism in check. For South Korea, the RCEP can become a new opportunity with regard to its New Southern Policy on the economic and diplomatic sides.
The heads of the 16 RCEP member states including India had a summit meeting and declared the provisional conclusion in Bangkok, Thailand on Nov. 4. The final conclusion and signing are scheduled for February next year. The time lag is because India is expressing concerns over the possibility of a massive product inflow from China to result from tariff reduction.
The first negotiation for the RCEP started at the East Asia Summit in November 2012. The total economic size of the 16 countries is US$27.4 trillion, which is equivalent to 32 percent of the total GDP of the world. Their combined population is 3.6 billion, 48 percent of the total population of the world. In addition, their intra-regional trade volume amounts to US$10.2 trillion, 29 percent of the global total trade volume.
Although the negotiation started in 2012, the countries began to stress the necessity of the conclusion in January 2017, when the United States withdrew from the Trans-Pacific Partnership (TPP) of 12 countries in the Pacific region. The move based on its America First policy resulted in more trade uncertainties on the part of Asian countries.
India must exempt tariffs on 90 percent of its imports from the ASEAN member countries and 74 percent of its imports from the non-ASEAN RCEP member countries if it joins the RCEP in accordance with the current plan. Under the circumstances, India is trying to lower the figures, saying that its membership based on the current plan will lead to an increase in trade deficit and more difficulties on the part of small local businesses.