The World's Largest Multilateral FTA
The Regional Comprehensive Economic Partnership (RCEP) is scheduled to become effective on Jan. 1 next year as the largest multilateral FTA in the world.
The RCEP consists of the 10 ASEAN member states, South Korea, China, Japan, Australia and New Zealand. The 15 states account for approximately one-third of the global total GDP. On Jan. 1, goods tariff elimination rates in the ASEAN markets will rise from 79.1 to 89.4 percent to 91.9 to 94.5 percent.
South Korean automobile, steel and petrochemical companies are expected to benefit a lot and the popularity of Korean culture is expected to further increase in the 10 countries as their culture and entertainment markets will be further opened. South Korea’s culture and service exports are expected to increase 3.3 percent for three years to come based on the RCEP.
The RCEP means the first FTA between South Korea and Japan. Their goods tariff elimination rates are 83 percent each, which is relatively low in the partnership because sensitive items such as automobiles and machinery are excluded. South Korea’s tariffs on Japanese alcoholic beverages will be eliminated over 15 to 20 years and the opposite tariffs will be eliminated over 20 years.
In South Korea, the RCEP will become effective on Feb. 1. According to the Ministry of Trade, Industry and Energy, South Korea’s real GDP is expected to increase 0.14 percent for 20 years to come based on the RCEP and it is expected to create 14,396 jobs in South Korea in that period. The ministry explained that these relatively small figures are because South Korea and the other non-Japan RCEP members already signed their bilateral FTAs.