RCEP trade pact which takes effect Jan 1, set to boost regional, global growth

 

The Asean secretary-general and leaders of the 15 RCEP member countries with their trade ministers after the pact was signed on 15 Nov 2020. PHOTO: MINISTRY OF COMMUNICATIONS AND INFORMATION (MCI)

 

` SAN FRANCISCO (CHINA DAILY/ASIA NEWS NETWORK, REUTERS) - The Regional Comprehensive Economic Partnership (RCEP) agreement, which will take effect on Saturday (Jan 1), is expected to significantly boost the regional and global economies and offer lessons for international cooperation.

` "The RCEP is a huge, potentially powerful agreement among rich and poor countries that complements each other's strengths," Professor Peter Petri, who specialises in international finance at Brandeis University in the United States, told China Daily.

` "For example, it has favourable rules for parts and components trade, and these could help developing members benefit from partnering with more advanced countries, making the region a haven for some of the world's most efficient supply chains," he said.

` "If its potential is realised, the RCEP would create larger markets and innovative, affordable products for the world economy," he added.

` Signed in November last year by 15 Asia-Pacific economies - all 10 member states of Asean, China, Japan, South Korea, Australia and New Zealand - the agreement has created the world's largest free trade bloc that accounts for about one-third of the global population and gross domestic product.

` It will take effect in 10 member states - Brunei, Cambodia, Laos, Singapore, Thailand, Vietnam, China, Japan, Australia and New Zealand - on Jan 1, and for the other five members 60 days after official deposition of ratification, acceptance or approval. 

South Korea will see it take effect on Feb 1.

 Indonesia's chief economic minister Airlangga Hartarto said on Friday (Dec 31) that Indonesia, South-east Asia’s largest economy, will likely ratify its RCEP membership in early 2022.

` A parliamentary commission overseeing trade rules had approved the ratification and its endorsement will be brought to a wider parliamentary vote in the first quarter of 2022, he said.

` President Joko Widodo will sign off on the ratification after parliamentary approval, he added.

` According to a recent study by Prof Petri and Prof Michael Plummer, an international economics expert at Johns Hopkins University in the US, the RCEP is estimated to increase world trade by nearly US$500 billion (S$675 billion) annually by 2030 and raise world incomes by US$263 billion annually.

` "There are several aspects of the agreement that will lead to significant economic effects, even if the RCEP is not as ambitious in scope as, say, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership," Prof Plummer told China Daily.

` "For example, it will create harmonised, cumulative rules of origin for intra-RCEP trade, which should give a significant boost to regional supply chains, at a time when supply chains are facing headwinds," he said.

` The agreement will lower tariffs on about 90 per cent of traded commodities and reduce some non-tariff barriers to trade in goods and services, according to Prof Plummer.

` "Importantly, it will create a free trade area among the North-east Asian economies of China, Japan and South Korea, giving a particularly strong boost to trade and production in the area of advanced manufacturers," he added.

` The study by the two economists, published by the East Asian Economic Review, estimates that the RCEP should increase regional incomes by US$245 billion on a permanent basis and create 2.8 million jobs in the region, which Prof Plummer described as "a significant boost".

` "In addition to its salutary effects on global incomes and trade, the RCEP offers an important boost to opening international markets, with very little negative effects on outside economies in the form of trade diversion," said Dr Plummer.

` Moreover, the RCEP shows how developed and developing countries can work together to include the interests of countries at all levels of economic development, he said.
`

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` "This could hold some important lessons for the WTO (World Trade Organisation), which reached an impasse at the Doha Development Agenda to a large extent because it was unable to accommodate the interests of developed and developing economies sufficiently," said Prof Plummer.

` Prof Petri also noted that the RCEP's success will depend on how well countries with different systems will work together to make the agreement successful.

` "If benefits are widely shared and relations are positive, members will implement the agreement fully and may even expand its scope," he said. "The RCEP could become a model for cooperation in an unusually diverse economic region."

More On This Topic

Regional trade pact RCEP to take effect on Jan 1; Australia, New Zealand ratify deal

Thailand ratifies RCEP regional trade pact

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Economic Watch: World's largest free trade deal boosts confidence of enterprises-Xinhua

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World's largest free trade deal boosts confidence of enterprises

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Malaysia's pragmatic patriot: friends with benefits

The South China Sea dispute. The global terrorism threat. Malaysia’s foreign policy is back in the world’s spotlight and it is exciting times for ISIS Malaysia’s Foreign Policy and Security Studies chief.

IN an article titled “Think tanks aren’t going extinct. But they have to evolve”, American scholar James Jay Carafano wrote that the capacity to do rigorous, credible research is “no longer sufficient” for think tanks to manoeuvre their ideas prominently into the policy debate. Instead, think tanks must learn to communicate “in ways that will allow their ideas to break through to decision-makers who are bombarded with information from all sides”.

In that regard, Elina Noor has proven to be a real asset to Malaysia’s premier think tank, the Institute of Strategic and Interna­tional Studies, or ISIS Malaysia. Her ability to articulate on complex and dynamic global affairs – such as major power relations, cyber warfare, terrorism and conflicts – in succinct yet jargon-free language has also made her a highly sought-after interviewee by the international media.

As a child, Elina wanted to be “everything”, from prime minister to fashion designer. Her parents, who ran a management consultancy firm, however, might have subconsciously put her on her career path by leaving the world news on television all the time when she was growing up.

“My parents would engage in lively debates about international affairs between themselves. As I grew older, I wanted to do law with an eye towards international law, specifically how war and conflict affect people.”

After graduating from Oxford University in the United Kingdom, she specialised in public international law at the London School of Economics and Political Science. This was followed by an internship at the Centre for Non-proliferation Studies at the Monterey Institute of International Studies in Washington DC, specialising in issues of weapons of mass destruction terrorism.

Essentially, she helped compile a database of terrorist groups with chemical or bioweapons capabilities by combing through secondary sources and obtaining intelligence from experts who had gone into the field.

Her days in the United States were cut short, however, by visa limitations. So, after nine months, she returned to Malaysia in 2001.

Her appetite whetted by her Washington experience, Elina joined ISIS Malaysia as a researcher.

Though formally positioned as a research organisation for nation-building initiatives, ISIS Malaysia was set up by former prime minister Tun Dr Mahathir Mohamad in 1983 to serve as a crucial sounding board for the government on foreign policy and security issues.

In addition to research, ISIS Malaysia engages actively in non-governmental meetings between states, known as Track Two diplomacy, and fosters closer regional integration and international cooperation through forums such as the Asia-Pacific Roundtable.

Now, having risen through the ranks, Elina heads a team of eight in the Foreign Policy and Security Studies division.

As a claimant state in the ongoing South China Sea dispute, chair of the Association of South-East Asian Nations in 2015, and currently a non-permanent member of the United Nations Security Council, Malaysia’s foreign policy direction has drawn renewed interest at home and abroad.

Invariably, Elina is asked questions on Malaysia’s relations with China. Her answer is perhaps best laid out in an article she wrote, titled “Friends with Benefits: Why Malaysia can and will maintain good ties with both the United States and China.”

On the topic, Elina had explained: “Malaysia should or will be subservient to an awakening dragon, but the cost-benefit calculus militates against provoking it. Equally, Malaysia’s location and posture make it a strategic partner for China in South-East Asia.

“It is the mark of a mature and solid friendship when overall relations are not held hostage to single-issue disagreements.”

Elina had added that such overlapping claims in the South China Sea, “should not, if managed well, stultify cooperation between Malaysia and China in other areas of the relationship. For a developing country with high-income and knowledge-economy ambitions like Malaysia, the show must go on”.

Or to put it simply, Malaysia wants to be everybody’s friend. That’s always been the country’s foreign policy from the start, she points out.

On the other hand, this pragmatic approach has also enabled the country to punch above its weight in places where even superpowers fear to tread.

Elina’s other portfolio, cyber warfare and security, is expected to come further into the spotlight with recent headlines claiming that the so-called Islamic State extremist group in Iraq and Syria intended to abduct top Malaysian leaders, including the PM.

“Malaysia up to this point has handled terrorism very well,” Elina says.

Many attempts have been foiled in the past, she adds, and the police have kept it low-key.

“If you follow the issues closely, you’ll notice the police only started publicising their efforts in the run-up to Pota (The Prevention of Terrorism Act 2015), an anti-terrorism law passed by the Malaysian government on April 7, 2015 enabling the Malaysian authorities to detain terror suspects without trial for a period of two years.”

Part of this publicising had to do with the political selling of Pota, but there was a more legitimate, pressing reason: People were taking security for granted in Malaysia.

“Malaysians treat security like it’s not a problem. We often criticise the police but the military and Special Branch in charge of counterterrorism really know what they’re doing. The police have been very vigilant and I think they do good work but haven’t been given enough credit.”

After 14 years, she still enjoys her job because of the intellectual robustness but admits some world-weariness has set in.

Nevertheless, Elina remains motivated by the knowledge that a lot of good Malaysians on both sides of the political divide are doing good work for the country.

Pointing to a faded wristband she has been wearing for “donkey’s years”, the inscription reads: “Malaysia tanahairku (Malaysia, my homeland)”.

“Call me cheesy,” she says, “but I’ve never thought of removing it. Love for country might, but does not always, equate to love for government. I’m a sentimental patriot.”

By Alexandra Wong, China Daily/Asia News Network