The Regional Comprehensive Economic Partnership Agreement (RCEP), the world’s largest trade agreement, was signed at a time when globalization encountered the greatest suspicion. More paradoxically, it was signed in East Asia in the absence of the United States and the European Union, which promoted the traditional standards of liberalization.
One of the innovations of the agreement is the formulation of unified rules of origin, which are essential for proving the origin of goods and imposing corresponding tariffs. This detail may seem trivial, but its role is decisive if one considers the characteristics of the production system in the region where the member states of the agreement are located. The exchange of intermediate products used in the manufacture of final products constitutes most of the commercial transactions in the region. Many products, especially technical products, often go through dozens of cross-border transactions before they are manufactured and exported to the final market. By reducing tariffs and establishing uniform rules of origin, RCEP encourages multinational companies operating in the region not to move to other regions.
The significance of the RCEP rules of origin is particularly important. RCEP will strengthen economic exchanges and improve efficiency in the region. Many multinational companies will find that the agreement incentivizes them to reshape rather than break away from the supply chain throughout the region. If the logic behind the trade war is to reduce the trade deficit with China, then RCEP is the latest blow to the trade balance between the United States and East Asia. The most important victory that RCEP has brought to Beijing is the establishment of a regional alliance, which checks and balances the trans-Pacific relations between the signatories and the United States. This huge agreement makes Asia more interdependent than ever before, which undoubtedly benefits China. In the turbulent 2020, it is not accidental that ASEAN replaced the European Union as China’s largest trading partner.
Although some people call the agreement a feat of multilateralism in the context of increasing protectionism, others think that RCEP is not too ambitious in terms of multilateralism. The fact is that RCEP mainly focuses on reducing tariffs between signatories. Asia has shown the world another approach to regional economic integration, combining trade liberalization with the coexistence of various ideologies and systems at different stages of social and economic development. The countries that brought China into the World Trade Organization have now retreated, and this Asian giant has become a driving force for international trade.
It has clearly become a clear attempt to promote trade and strengthen regional supply chains. The growing strength of intra-Asia trade has made the East Asian market more attractive to both local and foreign multinational companies. Its huge consumer base and high growth potential are in sharp contrast to the saturated and stagnant Western market. Now we are not just talking about “Made in Asia”. This is why the symbolic meaning of RCEP attracts more attention than the details.
The signing of RCEP is seen as a sign of the structural trend that East Asia has become the new center of gravity of the world economy.