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China and ASEAN push for timely RCEP start as Jan. 1 looms

Nikkei Asia - 15 September 2021

China and ASEAN push for timely RCEP start as Jan. 1 looms
By Satsuki Kaneko, Takashi Nakano and Iori Kawate

Countries that have signed on to the East Asia-spanning RCEP trade deal are going full speed ahead with plans to implement it on Jan. 1, 2022, despite foot-dragging by a majority, with China and ASEAN especially keen, for their own reasons, on seeing the pact come into force soon.

China, Japan, South Korea, and all 10 members of the Association of Southeast Asian Nations were among the 15 countries that signed the Regional Comprehensive Economic Partnership this past November to form the world’s largest free trade bloc.

The pact takes effect 60 days after six ASEAN signatories and three non-ASEAN signatories complete ratification or equivalent procedures. Japan, Singapore and China have done so, but many others have not.

Economic ministers from most of the signatories held a virtual meeting Monday and "welcomed efforts by signatory states to complete their internal process to have the RCEP agreement enter into force by early January 2022 as targeted," participants said in a joint statement afterward.

But time is running out. "Implementation at the start of next year will be tricky," a Japanese government insider said, echoing a widely held view.

ASEAN and China have their own motives for pushing RCEP forward. ASEAN views itself as the pact’s champion, and to implement an agreement that advances the cause of free trade even under the shadow of the coronavirus would have great significance for the Southeast Asian club.

In a show of commitment, ASEAN economic ministers reaffirmed the New Year’s Day target in a virtual meeting that ended last Thursday. Members hope that a new round of trade liberalization will revitalize their economies.

China, meanwhile, anticipates that RCEP will deepen its ties to ASEAN. In fact, Beijing was the one that announced the Jan. 1 target this past March.

RCEP would cover about 30% of the world’s population and gross national product. It would eliminate tariffs on 91% of goods, mainly industrial items.

Compared with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, for example, RCEP falls short in trade and rule liberalization. But RCEP is the only large free trade agreement that China has signed on to.

There are no signs that trade frictions between China and the U.S. will improve. And the European Union has reportedly suspended debate on an investment agreement with China in the European Parliament over human rights issues concerning the Uyghurs.

China is therefore placing much of its hopes in RCEP for boosting overseas demand.

Beijing is "steadily growing more impatient" with the lack of progress by ASEAN nations in implementing RCEP measures, according to an official connected to trade policy. Vice Commerce Minister Ren Hongbin called for faster ratification work on a visit Friday to a China-ASEAN event in the southern Chinese city of Nanning.

The U.S., which currently shows no desire to join the CPTPP or form any new free trade agreements, is pushing for supply chains not dependent on China. Japan and other partners are also cooperating with the U.S. in developing a China-free supply chain for semiconductors.

So it is in Beijing’s interest to take a leading role in trade with ASEAN through RCEP before a China-free trade structure takes root.

 source: Nikkei Asia