DEFINITION of Regional Comprehensive Economic Partnership (RCEP)
The Regional Comprehensive Economic Partnership (RCEP) is a proposed international free trade agreement (FTA) among 16 nations in the Asia-Pacific region. It includes the 10 member countries of the Association of Southeast Asian Nations (ASEAN), namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, and the six Asia-Pacific countries with whom ASEAN has existing FTAs, namely Australia, China, India, Japan, New Zealand and South Korea. (See also, A Brief History of International Trade Agreements.)
BREAKING DOWN Regional Comprehensive Economic Partnership (RCEP)
Conceptualized in 2011 and formally floated in 2012, RCEP was envisaged to bolster economic associations among the member countries and to promote trade and investment linked activities that could aid development all across the Asian region. The primary focus areas for initial RCEP negotiations are on the development and support of trade in goods and services, economic cooperation, intellectual property (IP), investment, competition, dispute settlement, e-commerce, and small and medium enterprises (SME) among the member countries.
While it has been a long wait for any concrete initiatives under RCEP since its formal launch six years back, the forum is again making headlines amid rising trade tensions between the U.S. and its major trading partners including those in Asia. The Asian counterparts of American trade are looking for new markets and opportunities as the Trump-led western powerhouse has installed trade tariffs, and the RCEP has emerged as a potential solution to the situation. The RCEP FTA is scheduled to be signed in November 2018 in Singapore, and the first RCEP summit is scheduled shortly after in the capital city of Manila, the Philippines. In a 2015 article, CNBC viewed RCEP as a potential substitute to the U.S.-backed Trans-Pacific Partnership (TPP), a proposed free trade agreement among 11 Pacific Rim economies that includes several Asian and American nations but excludes China and India. TPP failed with the U.S. withdrawal in January 2017.
Leading economic indicators provide insights into the RCEP’s potential. For instance, the 16 member nations of RCEP cover almost half of the world’s population, and account for 30 percent of the world’s gross domestic product (GDP) and more than 25 percent of the global exports, according to ASEAN. Going forward, GDP estimates for 2050 by PwC Global suggest that RCEP has the potential to account for half the share of the global economy as China and India are expected to hold the top two spots and the U.S. would drop to the third rank. (See also, Investing In The ASEAN Region.)