Breakthrough in RCEP negotiations on world’s largest free trade area

11:09 | 09/12/2019 Vietnam - Asean

(VEN) - After nearly seven years of negotiations, the 10 ASEAN member states and its allies reached agreement on the Regional Comprehensive Economic Partnership (RCEP) and pledged to sign the trade deal in 2020. The consensus over what is shaping up to be the world’s biggest free trade area was reached within the framework of the 35th ASEAN Summit and Related Summits in Thailand.

breakthrough in rcep negotiations on worlds largest free trade area

Market of 3.5 billion consumers

RCEP, launched in 2012, includes the 10 ASEAN members, as well as China, India, Japan, the Republic of Korea, Australia and New Zealand.

Vietnam’s Minister of Industry and Trade Tran Tuan Anh said the conclusion of negotiations marks a very important milestone in the country’s process of international economic integration in particular and of all countries participating in RCEP in general, given increasing trade protectionism around the globe.

According to Tran Tuan Anh, RCEP, with a market of around 3.5 billion consumers and total gross domestic product (GDP) of approximately US$49 trillion that accounts for about 39 percent of global GDP, will form the largest free trade area in the world. Member countries are to join the open market for goods and services, investment opportunities, facilitated trade and simplified customs procedures.

The trade deal is expected to strongly promote the development of regional and global value chains, helping to further strengthen economic development of ASEAN countries, including Vietnam and its partners. Given the obstacles of trade protectionism facing international and regional economies, the successful negotiation of the trade deal will contribute to the creation of a new trade structure in the region, helping push globalization towards liberalization and trade facilitation in a sustainable manner.

Promoting Vietnamese exports

After implementing the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) since January 2018 and signing the EU-Vietnam Free Trade Agreement (EVFTA) in June 2019, the conclusion of the RCEP negotiations will open up more opportunities for Vietnamese businesses to boost exports, participate in new value chains in the region, and draw more foreign investment.

Once RCEP is signed and takes effect, the source of raw materials imported by Vietnamese businesses from the ASEAN+6 countries will be considered raw materials produced in Vietnam, facilitating exports to countries that have signed bilateral and multilateral agreements with Vietnam.

Nguyen Thi Thu Trang, director of the WTO and Integration Center under the Vietnam Chamber of Commerce and Industry (VCCI), said RCEP is the largest free trade area in which Vietnam has ever participated and businesses have great expectations of the deal.

RCEP member countries have high demand for products in which Vietnam is strong, such as phones, electronic products, garments and textiles, and footwear. In addition, RCEP promises better market openings for service sectors.

According to VCCI, RCEP member countries are now supplying 80-90 percent of input materials to Vietnam and Vietnam depends heavily on this region to improve the competitiveness of its exports. However, to enjoy tax incentives, Vietnam must adhere to the rules of origin.

Tran Tuan Anh said as ASEAN chair in 2020, Vietnam has an important role to play in supporting ASEAN members and its partners to resolve a number of remaining issues. Vietnam has affirmed that it will continue to work closely with ASEAN countries in maintaining the leading role of the bloc and also work closely with the six partner countries to accelerate the early conclusion of the RCEP negotiations and quickly complete all legal reviews to prepare for the signing of the agreement, Tran Tuan Anh said.

Song Huong