n January 1, 2022, the Regional Comprehensive Partnership Agreement (RCEP) took effect. Signed by 15 countries, including China, Japan, South Korea, Australia, New Zealand and the 10 members of the Association of Southeast Asian Nations (ASEAN), the trading block constitutes the largest free trade club in the world.
In an exclusive interview with NewsChina, Xu Ningning, executive president of the China-ASEAN Business Council and chairman of the RCEP Industry Cooperation Committee, said the huge free trade deal will not only help fast-track post-pandemic economic recovery, but also strengthen international ties and regional stability.
NewsChina: What impacts will the implementation of the RCEP have on cooperation between China and ASEAN?
Xu Ningning: The RCEP features quite a few terms and content aimed at facilitating and liberalizing trade in services and investment, which is beneficial to promoting China-ASEAN cooperation. With the formal implementation of the agreement, China-ASEAN cooperation will, based on the framework of previous free trade agreements (FTA), see more opportunities for deeper market integration. Especially in terms of mutual investment, it offers businesses an institutional foundation for more liberalization and facilitation, which serves as a key foundation for China and ASEAN to strengthen and boost the resilience of their supply chains.
The implementation of the RCEP is conducive to the matchmaking and cooperation of industries between China and ASEAN, which is expected to boost industrial upgrading. It will also give full play to the flexibility and representation of China and ASEAN’s business associations, pushing bilateral industry cooperation to new heights.
The implementation of the RCEP will provide a good chance for China and ASEAN to support cooperation in the digital economy, green economy, connectivity and other fields, and promote innovative development, sustainable development and integrated development. The RCEP free trade policies will help address challenges, build a better future and promote rapid economic recovery in the post-pandemic era.
NC: Will the implementation of the RCEP strengthen ASEAN’s central position in Asia-Pacific economic cooperation?
XN: The five “10+1” FTAs, free trade agreements established by ASEAN with China, Japan, South Korea, Australia and New Zealand reflect ASEAN’s central role. Eight years ago, ASEAN initiated negotiations on the RCEP, which finally came into effect on January 1 thanks to the joint efforts of the 15 countries. The RCEP has been initiated and led by ASEAN, which both reflects the bloc’s leading role in regional cooperation and strengthens ASEAN’s international status. China and ASEAN have worked closely together and played a major role in promoting the construction of the RCEP. After the agreement was formally signed on November 15, 2020, leaders of China and ASEAN countries expressed, on multiple occasions, their eagerness for the agreement to take effect as soon as possible.
One of the successful experiences in ASEAN’s development is free trade plus multilateral cooperation. ASEAN was the first bloc in East Asia to implement an FTA, and the FTA policy has contributed to its unity, stability and economic growth. Whenever a crisis hit, such as the 1997 Asian financial crisis, the 2008 global financial crisis or the Covid-19 pandemic, ASEAN has always responded by further promoting FTAs and economic integration as a key solution to address crises.
Although some ASEAN countries are worried about the potential impacts on a few local industries and sectors, ASEAN has, nevertheless, signed multiple FTAs. Investments from big countries (including China) outside ASEAN are conducive to the overall industrial upgrading within ASEAN. For example, Indonesia was the ASEAN member most concerned about the potential risks of FTAs. In recent years, investments by Chinese companies in areas such as mining, mineral processing and the construction of industrial parks have boosted Indonesia’s industrial upgrading. Another example is the FTA between Vietnam and the EU. In the beginning, Chinese garment companies only engaged in production of ready-to-wear clothes in Vietnam, but over time, companies along the industry chain started to invest in Vietnam. Thanks to the FTAs, ASEAN has become one of the most dynamic regions in the global economy.
NC: How will the RCEP influence the global economy?
XN: The RCEP will inject new vitality into global economic growth. No other regional cooperation can bring more hope to the world economy than the RCEP, the world’s largest FTA which covers 30 percent of global population, 30 percent of global trade, and 30 percent of global GDP.
The implementation of the RCEP will certainly push ChinaASEAN cooperation to a higher level. China and ASEAN are each other’s biggest trading partners and key investment partners. The implementation of the agreement makes the East Asian region an engine for global economic growth, while China and ASEAN are the main driving forces of this engine.
The RCEP will not only accelerate economic and trade cooperation among countries within the region, but also help attract external businesses to invest in member countries. At the same time, the agreement will propel Asia-Pacific regional economic integration into a new stage of development in which members open markets to each other, thus activating the potentials of regional development, driving regional economic recovery, and jointly addressing uncertainties of the world economy. In addition, the agreement reflects the determination of the signatories to jointly promote free trade and multilateral cooperation, as well as contribute to the global economy. East Asian economies will continue to play a leading role in global economic growth.
It is worth mentioning that the integration of the RCEP’s members will be conducive to regional stability, as well as to the improvement and development of mutual relations.
Despite some issues between some members and China, the RCEP is essentially a free trade agreement, an economic concept achieved by signatory countries based on economic rules. It is hoped that countries improve bilateral relations, deepen neighborly relations, and promote the RCEP as soon as possible to achieve its intended purpose and provide impetus to these countries’ economic growth.
NC: China and ASEAN already have the RCEP, so why have they started working on a China-ASEAN Free Trade Area version 3.0?
XN: At the recent Special Summit to Commemorate the 30th Anniversary of China-ASEAN Dialogue Relations, Chinese leader Xi Jinping proposed version 3.0 of the China-ASEAN Free Trade Area to upgrade the existing bilateral FTA, launched on January 1, 2010 and updated in 2019, with a zero-tariff policy covering more than 90 percent of tariffed products on both sides. The new 3.0 version will significantly further liberalize and facilitate trade and investment.
China and ASEAN agreed to push forward the “Free Trade Area 3.0” right after the RCEP came into effect. The purpose is to lay a better foundation and create favorable conditions for future development of the RCEP through the upgrading of the five “10+1” FTAs. After all, the 15 member countries of the RCEP are different in terms of economic development, market maturity, industry characteristics and openness. Upgrading the existing “10+1” FTAs will pave the way to further improve the RCEP. The construction of the China-ASEAN Free Trade Area 3.0 will provide a pilot model for the upgrading of the other four “10+1” FTAs.
Compared with the RCEP, the China-ASEAN Free Trade Area 3.0 will have greater market openness with improved investment liberalization and facilitation. With China and ASEAN’s experiences in negotiations over their Free Trade Area 2.0, talks on version 3.0 will be a lot easier.
Construction of the RCEP will promote negotiations on the ChinaASEAN Free Trade Area 3.0, which is meaningful only if it achieves higher levels of trade and investment facilitation. The construction of the Free Trade Area 3.0 will also contribute to improve the RCEP.