REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP (RCEP)

by Min Li, Shahizan, and Fang Ting

The Regional Comprehensive Economic Partnership (RCEP) is a mega-regional economic agreement.  The RCEP agreement is largely driven by Association of Southeast Asian Nations (ASEAN) to greater economic integration, support equitable economic developments and strengthen economic cooperation among the countries involved. The countries involved are the ten members of the ASEAN, along with China, India, Japan, Korea, Australia, and New Zealand. RCEP was built upon the five existing ASEAN+1 agreements. The objective is to achieve a modern, comprehensive, high-quality and mutually beneficial economic partnership agreement. The RCEP has eight coverage areas which are a trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement and other issues.

RCEP has potential to benefit ASEAN countries. It helps to deliver significant business opportunities in the East Asia region because it contains three largest economies which are China, India, and Japan. RCEP also aimed at lowering trade barriers and securing improved market access of goods and services. RCEP enables to boost global economic growth which promotes easier FDI flows and technology transfers. Besides that, it also enables SMEs leverage on the agreement and copes with challenges arising from globalization and trade liberalization.

Furthermore, Malaysia might benefit as the member of RCEP. It will strengthen Malaysia’s economy and foundation as a trade-oriented country. RCEP also enables Malaysia to increase the quality of products and the integration of business in the regions will increase the attractiveness of Malaysia as an investment destination.

However, there are some threats of RCEP to people and planet. RCEP is locking in the secret corporate tribunal because corporation rights allow to bypass domestic legal systems and sue the government in international tribunals. RCEP is also driving a ‘Race to the Bottom’ on social and environmental protections. Under RCEP, goods produced with high carbon emissions will not be penalized which risk the climate. Next, higher prices of medicines due to the patent of monopolies. Increasing corporate control of agriculture harms millions of small farmers under this agreement. Moreover, member countries with different levels of development make RCEP can only achieve limited trade and investment liberalization.

In conclusion, RCEP has the potential to transform the region into an integrated market of more than three billion people (over 45% of the world’s population), with a combined GDP of about US$ 17.23 trillion, which is about a third of the world’s current annual GDP. But, it is still in the progress of negotiation and is set to be finalized in 2018.