The leaders of ASEAN, South Korea, Japan and China pose for commemorative photos at the 22nd ASEAN Plus Three summit held at the IMPACT Forum building in Bangkok on Oct. 4, 2019. At the summit, South Korea’s President Moon Jae-in called for stronger regional cooperation and efforts to safeguard free trade. [Photo provided by Lee Chung-woo]
South Korea and 14 neighboring countries from the Asia-Pacific region on Monday agreed on the final terms of China-backed Asia-Pacific trade deal, moving a step closer towards signing the deal next year to raise regional competitiveness against growing protectionism on the global trade front.
According to the trade ministry on Tuesday, 15 out of 16 participants at the East Asian Summit in Bangkok on Monday have agreed to sign onto all 20 chapters of the Regional Comprehensive Partnership (RCEP), a mega trade deal in the Asia Pacific region initiated by China, in February next year after legal reviews for the draft terms.
India withheld decision, citing its mounting deficit in trade with China and concern for damages to the local farming and other industries.
Some raised concerns that the agreement “is incomplete” without India, the world’s seventh largest economy with 1.3 billion people. Initially, the deal was to loop in all 10 ASEAN countries plus South Korea, Japan, China, India, Australia and New Zealand.
The remaining members vowed to work together with India to resolve the raised concerns in a mutually satisfactory way for India so that India can sign on the deal next year.
When including India, the RCEP would be the world’s largest free trade agreement with members of 16 countries accounting for 32 percent of global GDP, 29 percent of global trade and 48 percent of the entire population in the world.
“It could be an opportunity to help our companies make headway to other promising markets,” said a Korean government official, citing the participating countries’ economic growth and populations.
China’s GDP grew 6.8 percent in 2017, India 6.7 percent, and Vietnam 6.3 percent, much bigger than the growth of other major economies such as 1.6 percent of the U.S. and 1.7 percent of the Eurozone.
Korea’s real GDP upon the signing of the deal is estimated to grow by 1.21 to 1.76 percent for the following 10 years, with consumer benefits rising $11.351 billion to $19.456 billion, according to the Korea Institute for International Economic Policy.
The Korean government also is betting big on the agreement as it has decided to stay out of the Japan-led trade initiative, or the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The RCEP talks started in 2012 with the year’s East Asia Summit. Around 30 official negotiations and 20-some ministerial meetings had been held to iron out details for the 15-country mutual agreement.
Intended to further expand and deepen regional value chains for the benefits of businesses, workers, producers and consumers, “RCEP will significantly boost the region’s future growth prospects and contribute positively to the global economy, while serving as a supporting pillar to a strong multilateral trading system and promoting development in economies across the region,” said a joint statement from the leaders of the 15 countries.
The deal also would provide a great safety net to countries in the region amid rising uncertainties in the global trade from growing protectionism and ongoing trade disputes between the world’s two biggest economies the U.S. and China, analysts said.
By Lim Sung-hyun and Lee Ha-yeon
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