News of China ratifying the ASEAN-led Regional Comprehensive Economic Partnership (RCEP) coincides with the UK's application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as the Asian Development Bank expects the two massive Asia-Pacific-centered trade deals to bring a total of US$333 billion economic gain by 2030:
The pandemic outbreak in 2020 disrupted both supply and demand sides of an interconnected world economy. Asia and the Pacific was not immune as lockdowns and travel and trade restrictions affected nearly all aspects of cross-border economic activity.
The ADB's Asian Economic Integration Report 2021 looks at how regional economies individually or collectively have responded to the crisis by, for example, leveraging rapid technological progress and digitalisation as well as increasing services trade to reconnect and recover.
Importantly it covers the world's two newest and among the biggest trade deals - the RCEP and CPTPP - which are expected to bring a total of US$333 billion economic gain by 2030.
The 15 nations in the RCEP account for 29% of global GDP, 25% of global trade, and a population of 2.3 billion, while the 11 nations in the CPTPP account for 13% of global GDP, 14% of global trade, and a population of 507.7 million.
The ADB report found that while both are mega-trade deals, their breadth and depth are different. Overall, the degree of liberalisation within RCEP is not as deep as in the CPTPP, and the coverage is less comprehensive. RCEP is expected to spur renewed momentum for intraregional trade and strengthen value chains among the +3 countries - China, Japan, and South Korea - as well as between them and other members.
While RCEP is the first FTA covering the +3, at the same time it is also the first to include two of the world’s three largest economies. Unlike the CPTPP, RCEP does not include provisions to harmonise regulatory standards on the environment or labour markets.
CARI ASEAN Research and Advocacy has highlighted the report's estimate that CPTPP will increase world real income by US$147 billion by 2030 with RCEP adding US$186 billion. RCEP members are projected to gain US$174 billion in real income by 2030, equivalent to 0.4% of members’ aggregate GDP. The +3 countries will benefit the most, with likely gains of US$85 billion for China, US$48 billion for Japan, and US$23 billion for South Korea.
Other significant RCEP gains will accrue to Indonesia, Malaysia, Thailand, and Vietnam. RCEP will also create sizable new trade among the +3 countries.
Free download of the full report or executive highlights here