As of 1 January 2022, the Regional Comprehensive Economic Partnership (RCEP), the world’s largest multilateral trade agreement, has gone into effect. The RCEP covers 15 states, including China, Japan, the Republic of Korea, Australia and New Zealand. Their combined population is about 2.3 billion people, approximately 30 per cent of the world’s total, with a global GDP of $28.5 trillion.
At the heart of the RCEP are tariff concessions, and member states are expected to eventually eliminate tariffs on more than 90 per cent of goods traded within the PREC bloc. This will particularly benefit three regional giants: China, Japan and South Korea, which are now united for the first time by a free trade agreement.
For example, tariffs on Japanese exports of some electric vehicle components to China will be eliminated, according to the Japanese trade ministry. Japan is expected to be the biggest beneficiary, with global export effects estimated at $20.2 billion, followed by China at $11.2 billion and South Korea at $6.7 billion.
The UNCTAD – United Nations Conference on Trade and Development study estimates that tariff concessions by RCEP participants will increase the region’s exports by 2 per cent compared to the 2019 level, or about $41.8 billion, diverting trade from non-member state economies and stimulating new trade within the RCEP group.
The RCEP is expected to increase regional trade flows and deepen cross-border production linkages between the economies of its 15 member states. More than 90% of trade in goods between these member states is now subject to zero tariffs.
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