SYDNEY – The Regional Comprehensive Economic Partnership (RCEP) trade agreement will take effect on Jan. 1, according to the Australian government, with the deal aimed at facilitating trade liberalization and economic integration across Asia and the Pacific.
The 15-member RCEP — the world’s largest free trade agreement despite the absence of the United States — will be Japan’s first such pact to involve both China and South Korea.
The agreement can enter into force now it has been ratified by Australia and New Zealand, Dan Tehan, Australia’s minister for trade, tourism and investment, said in a statement released Tuesday.
“RCEP will enter into force 60 days after ratification by at least six ASEAN states and at least three non-ASEAN states. That milestone was reached on 2 November 2021 with ratification by Australia and New Zealand, which will pave the way for RCEP to enter into force on 1 January 2022,” the statement said.
Phil Twyford, New Zealand’s minister of state for trade and export growth, confirmed Wellington’s ratification Tuesday of the pact, calling it a move that will further accelerate the country’s economic recovery from the COVID-19 pandemic.
“Businesses will be able to take advantage of RCEP’s opportunities from early next year,” Twyford said in a statement. “This agreement will also enable our businesses to be better connected via regional supply chains and provide more certainty to exporters in what remain globally uncertain times.”
Citing the 10-member Association of Southeast Asian Nations (ASEAN) as “a critical part of the global economy,” he said, “New Zealand and Australia’s dual ratification of the ASEAN-led RCEP agreement demonstrates the strong relationship we share with ASEAN.”
The RCEP is designed to remove tariffs on 91% of goods and standardize rules on investment, intellectual property and e-commerce among other trade practices.
It also aims to promote optimization of supply chains within the free trade zone, which accounts for about 30% of the world’s output, trade and population.
With the entry into force of the RCEP agreement, Japanese companies operating internationally are expected to improve their business efficiency due to reduced tariffs and unified rules.
Welcoming the latest development, Japan’s Foreign Ministry said in a statement that it hopes the agreement “will contribute to the economic growth of Japan and the region, by further strengthening the link between Japan and the region as a growth center of the world.”
The Japanese government has estimated the pact could lift the gross domestic product of the world’s third-largest economy by about 2.7% and increase employment by about 570,000.
The RCEP groups ASEAN — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam — plus Australia, China, Japan, New Zealand and South Korea.
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