BANGKOK -- Members of the Regional Comprehensive Economic Partnership (RCEP) reaffirmed their target of putting the trade pact into effect by early next year, as smoother trade will hasten recovery from the COVID-19 pandemic.
Doing so would also give the member states an advantage over the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), as it would be the only multilateral trade pact that includes China at present.
"[We] reaffirmed our commitment to expedite respective domestic procedures to have the RCEP Agreement enter into force in early January 2022 as targeted," said a chairman's statement from the ASEAN-Australia Summit held on Wednesday, "in order to enhance market and employment opportunities for businesses and people in the region."
The partnership was sealed by China, Japan, South Korea, Australia, New Zealand and all 10 members of the Association of Southeast Asian Nations in November 2020. But it requires ratification from at least six ASEAN signatories and three non-ASEAN signatories for the pact to take effect.
On Oct. 21, Laos became the latest country to ratify the pact. Singapore, Brunei, Cambodia, China, and Japan had given their approval earlier. This means that ratification by just two more ASEAN countries and one more non-ASEAN country would formally launch the comprehensive agreement.
Thailand, the Philippines, Australia, and New Zealand have won legislative approval and are taking final steps toward ratification.
The summit statement suggests ASEAN and Australia's willingness to finalize the process in the coming weeks for an early January launch.
The pact will create a large trading bloc covering about 30% of global gross domestic product and population. Once in effect, it will eliminate tariffs on as much as 90% of goods traded among its signatories over the next 20 years.
For companies around the world, the RECEP could become an incentive to invest in the member states. The ability to export tariff-free to markets like China, South Korea, and Japan while manufacturing in member countries with relatively cheaper labor would more than offset the added logistics costs.
The RCEP is unique in that it is the only multilateral trade pact that includes China. But this could soon change, as Beijing submitted a formal request in September for membership to the CPTPP.
Trade rules are much more liberal in the CPTPP than those in the RCEP, hence getting the latter ratified and working quickly is crucial. If -- or when -- China is eventually granted membership to the CPTPP, the two pacts might begin to look similar.
But China's application for CPTPP membership is not certain as Taiwan has also applied. The two bids are in danger of fueling a political debate within the bloc rather than focusing on free trade. Apart from ideological issues, China will need to spend years correcting illiberal trade and market practices, such as becoming more transparent over labor protections and environmental issues in order to meet CPTPP rules. This delay could work in favor of the RCEP.
"We reiterated our resolve to ensure that the [RCEP] remains to be ASEAN-led and driven," the ASEAN wrote in its summit statement. Getting those needed countries in the fold as soon as possible could determine whether the RCEP becomes the dominant trade bloc in the region for the foreseeable future.