RCEP lays foundation for win-win trade

19/09/2022    59

Before and after its establishment, the Regional Comprehensive Economic Partnership has faced many an obstacle and criticism. The main criticism is that China's intention behind helping establish the RCEP is to exploit and control the Association of Southeast Asian Nations politically and economically. But actually the worst challenge to the RCEP has come from the United States-in the form of the Trans-Pacific Partnership proposed by former president Barack Obama.

To begin with, the TPP excluded China, the second-largest economy not only in the Asia-Pacific but also the world, and included only four of the 10 ASEAN member states-Brunei, Malaysia, Singapore and Vietnam.

The TPP was an affront to ASEAN in that it violated the very principle of its establishment, that is, rejecting any politicization within ASEAN, especially in terms of trade-and excluding the largest ASEAN economy and a Pacific country in the true sense of the term: Indonesia.

Therefore, the response from ASEAN as a whole to the TPP was not enthusiastic. The TPP, however, didn't take off because Obama's successor Donald Trump pulled the US out of the free trade partnership.

Now, Joe Biden, Trump's successor, seems bent on triggering a new Cold War against China and drawing ASEAN to the US' side. Again, ASEAN's response is negative.

Since 2012, when the proposal to establish the RCEP was given, China and ASEAN have intensified efforts to boost two-way trade. Eventually, they finalized the RCEP agreement, the world's largest free trade agreement, and ensured it took effect on Jan 1 this year. In all, the RCEP has 15 signatory states-10 ASEAN members, China, Japan, the Republic of Korea, Australia and New Zealand-which have vowed to further develop trade, increase investment, and pursue common development.

The RCEP gives China several advantages including abundant scope of increasing trade and investment, larger source of workers, more natural resources, a market of 700 million people, and opportunities to link up with other regions, such as North America and the European Union through ASEAN.

According to data from China's General Administration of Customs, from January to August China-ASEAN trade has reached 4.09 trillion yuan ($586.1 billion), up 14 percent year-on-year, accounting for 15 percent of China's total foreign trade. More important, ASEAN has become a top trading partner of China thanks partly to the RCEP.

The RCEP gives ASEAN various advantages, too, including greater access to China's market of 1.4 billion people, and more trade and investment opportunities, which could increase employment and help ASEAN economies to expedite their industrial upgrading.

The RCEP has also created a common market system by eliminating many customs limitations, lifting many import and export trade barriers, and securing improved market access for goods and services for businesses. A free market is created when 90 percent of goods being traded by countries are exempted from tax, and natural resources and human resources are better tapped.

The potential of the RCEP is unlimited because of its win-win philosophy and the way it has been handling market developments. On the other hand, in the West-dominated global trade and investment system, zero-sum games and winner takes all policies have overwhelmed the rest of the world.

The unequal distribution of wealth across the world is the result of the developed countries of North America and Western Europe getting rich on the resources and workforce of Asia, Africa and Latin America.

And that's what the RCEP aims to correct through its win-win philosophy of doing business. It is expected that the success of the RCEP will win the support of the whole world, including the people of North America and Western Europe.

Source: China Daily