The RCEP trade deal China is advocating will offer immense benefits to member nations including forgoing export paperwork requirements.
China wants to facilitate the world’s largest trade deal after being left out of US President Joe Biden’s new Indo-Pacific strategy. The East Asian powerhouse is focusing on hosting a critical discussion on RCEP instead, to support of multilateralism and globalization.
RCEP vs IPEF
The Regional Comprehensive Economic Partnership (RCEP) forum took place in the southern Hainan archipelago in the South China Sea. The meeting somewhat confirmed that China would create a trade strategy instead of reacting to the US-driven Indo-Pacific Economic Framework (IPEF). Li Xirui, a trade scholar at S. Rajaratnam School of International Studies in Singapore’s Nanyang Technological University, said that “China will not take immediate or very targeted measures to respond to the IPEF.”
Xirui also stated that China would simply resort to further expanding its economic dominance in the Asia-Pacific region. This would be better facilitated under the RCEP business model, running parallel to any future US Asia-Pacific economic initiatives.
The RCEP has more than a dozen countries in the Asia-Pacific region collaborating on global goods trade. The benefits of this monumental trade vision see progressive tariff reductions on products from member states. In addition, the RCEP deal also permits businesses to sell the same goods within the bloc without the necessary paperwork requirements for each export destination.
In a nutshell, the RCEP trade deal, which China continues to promote and adopt, grants member states vested market access. This is something that the Biden-led Indo-Pacific Economic Framework (IPEF) lacks. The IPEF involves thirteen countries in the region, including Japan and India, but not China. Generally, this Indo-pacific strategy is also a salient attempt by the US to further consolidate its political and economic leadership in the Indo-Pacific region.
Under the RCEP initiative, China also wants to focus on its applications to join other large-scale trade deals. These include the second-largest global trade pact, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Digital Economy Partnership Agreement (DEPA).
China RCEP Trade Deal Traction
China has already made substantial headway with its RCEP implementation since its launch in January. The country created a plan for Chinese businesses to expand trade and find opportunities through the RCEP. This blueprint encompassed six areas, including trade and manufacturing. In addition, the trade guidelines also promoted the use of the Chinese yuan as a form of settling trading transactions. Furthermore, Beijing also agitated for businesses to lean towards Hainan’s heavily publicized free-trade port.
According to analyst observations, no less than 10 provinces already had extensive plans to utilize the RCEP, including Fujian and Zhejiang. Other provinces like Yunnan plan to use the same model to increase agricultural exports. In addition, many provinces have also pledged to offer support services. Some of the expected services include intellectual property rights and trade dispute resolution mechanisms for RCEP.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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