Message of support for multilateral trade

Tuesday, 2020-07-28 16:31:23
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Leaders at the third Regional Comprehensive Economic Partnership (RCEP) Summit in Thailand last year. (Photo: VNA)
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NDO – The Regional Comprehensive Economic Partnership agreement (RCEP) which aims to be signed by the end of this year has sent a message of support for amultilateral trading system and a strengthening of regional economic integration. As the ASEAN Chair in 2020, Vietnam has been lauded for its active efforts to promote negotiations towards the signing of a major regional project led by ASEAN.

Initiated by ASEAN in November 2012, RCEP is a free trade agreement (FTA) amongst 16 countries, including 10 ASEAN member countries and six partners, namely India, China, the Republic of Korea, Japan, and Australia and New Zealand.

The objective is to establish a foundation of extensive economic cooperation and create a market of 3.5 billion consumers, equivalent to 45% of the world's populationwith a GDP of approximately US$49trillion, equivalent to about 30% of global GDP.

With commitments to open markets for goods, services and investment, simplify customs procedures and establish rules of origin, facilitate trade, minimise barriers, etc, it is expected to create the largest free trade area in the world, fostering regional trade and value chains, thereby promoting the economic growth of ASEAN countries and their partners.

In May 2013, RCEP negotiations were kicked off, with the original intention being to complete and sign the agreement before 2015. However, the negotiation process faced a number of difficulties, mainly because some members had not previously had bilateral FTAs. By November 2019, on the side-lines of the 35th ASEAN Summit in Thailand, the countries participating in the RCEP achieved an important breakthrough and declared the basic completion of the negotiations.

However, at the last minute, India decided to withdraw from the RCEP, because of concerns about some terms that are not beneficial and could in their view be considered unfair to the Indian economy. The remaining 15 members declared they would “leave the door open” to New Delhi, and set a deadline to sign the final document by the end of 2020.

Despite lacking the participation of a large regional economy, members have still maintained the goal of adding RCEP to a new generation of high-quality FTAs and a model designed for international trade in the 21st century.

According to the overall assessment, RCEP will act as a regional trade standard maker, because treaty rules can become the norm and legal precedent for regional trade agreements in the future. In fact, RCEP has an open mechanism, leaving opportunities for the participation ofall partners around the globe.

RCEP is also seen as an important and timely impetus for multilateralism and a revitalisation of the stagnant global trading system. Trade disputes, fierce competition among major economies and increasing protectionism are shaking the spirit of multilateralism and international cooperation.

If signed fully at the end of this year, RCEP will send a message of support for such a multilateral system, promote regional economic integration and create a “push” for global trade. As the world is struggles against the COVID-19 pandemic, RCEP is expected to contribute to joint efforts to revive economic activity and adapt to the new normal after the pandemic.

As the rotating chair of the Association, Vietnam and ASEAN member countries have chosen “Cohesive and Responsive” as the theme for the ASEAN Chairmanship Year 2020, which is in line with the goal of strengthening regional integration and creating a more cohesive environment within ASEAN to adapt to the new context of the Fourth Industrial Revolution.

In particular, the signing of RCEP is a priority goal of Vietnam in managing the Association's activities. Vietnam has actively participated in discussions and actively proposed flexible solutions, handling problems among the parties, while at the same time protecting its national interests. The countries have appreciated Vietnam's capacity and flexibility in coordinating the parties to advance towards the conclusion of negotiations and complete the legal review to prepare for the signing of the RCEP as planned.

Together with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and with the upcoming signed RCEP, Asia will have two major FTAs that will act as the basis for the orderly confluence of regional trade, as well as promote more comprehensive economic integration.

As a number of protectionist policies are weakening the global trading system, an ASEAN-led project, RCEP, will contribute to strengthening the Association's central role, laying the foundation for a larger FTA, towards a more comprehensive economic partnership agreement in the Asia – Pacific region.