International

business
12/8/2020

Assignment no: 02

Regional comprehensive economic

partnership

nageeta bai
BBA VII B
SUBMITTED TO: DR. SARFRAZ
Regional comprehensive economic partnership
A modern free trade harmony that will design global economics and
politics.
After eight years of negotiation countries signed partnership agreement in 2020. Regional
comprehensive economic partnership is a proposed agreement between association of
southeast Asian nations with Asia pacific countries china, Australia, Japan, New Zealand,
South Korea. It consists of developed and developing nations so it reflects as it will change
game globally by making single market and same single rule regulations, low tariffs which
effects worldwide. it is a major trade deal that covers third of population and 30% of GDP. It
is larger than European union and united state Mexico Canada agreement. Regional
integration is basic form of cooperation which enable countries to negotiate about their trade
issues, that is related to their growing stage.

Objectives
The main objective of Regional Comprehensive economic partnership is to create integrate
common market for these 15 countries where they easily trade without barriers.
Agreement is negotiated on free move of goods, services, intellectual property, dispute
settlements of business, investment opportunities, Government procurements, economic and
technical cooperation’s.
RECP is expected to remove range of barriers, tariffs on goods, build a strong relationship
between member countries, boost up economy.

Economic impact
RCEP will bring favorable share of economic benefits, south east Asian countries will take
benefit from this agreement but less than northeast Asian because they have already free
countries can get advantage from it, if RCEP agreement gives them to Access of market,
technology, communication.
Diversity among member countries in terms of income, resources, technology industry. so,
agreement will provide growth opportunities to many developing nations. As Samsung
industry in Korea, Toyota industry in japan, many other cheaper productions from china.
therefore, these manufacturing industries will give more value to GDP. this will create a
positive impact on foreign direct investment. Poor nations will get products from global value
chain countries at cheaper prices so it can increase their purchasing power which ultimately
improve their human development index. These manufacturing industries will create
employment opportunities for developing countries.
RCEP agreement will promote multinational companies to work within bloc chain network,
where many global value chain countries are members.so, it will enhance foreign direct
investments.

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Integrate market within member countries will become a source of production for developing
countries, from which low-income countries can produce more domestically and improve
their current account deficits by more exporting to other countries. Cambodia, Myanmar,
Laos will enjoy from common market strategy.
Manufacturing factories or production from Cambodia can be exported to china, japan
Australia, and other RCEP member countries with low tariffs, and china will also help
developing nation by making their infrastructure through china initiative belt and road.

Political Impact
China is considered as leading country in this agreement because USA is not involved in
partnership, which will give opportunity not only china but also south Korea and japan to
show dominancy and economic strength. India also boycotted last year from this
partnership.so, it will impact on relationship between nations. This partnership is opportunity
for china to build strong relation with fast growing southeast nations. First time in history,
rival countries come into single platform china japan, south Korea and japan. RCEP is
providing new access to market where these member countries can trade easily without any
restriction of dominant countries. If USA imposes tariffs on products so now countries have
another market for freely trade. This partnership is not only within these 15 nations but also
signals for other developing nations to become part of it and get benefit from it.

challenges
A big challenge for agreement is to implementation of trade with zero tariff and create
a bridge for all member countries who get benefit from partnership. Developing nations will
not get much benefit from this free trade agreement as foreign products becomes more
cheaper therefore consumers of poor nations will prefer foreign goods as compared to
domestic goods, so it means import exceeds to exports. each member country does not get
benefit from it because many member counties are already involved in free trade agreement.
Or we can say only developed nation can get benefit from this agreement.

Conclusion
In summary, RCEP is a global platform for free trade, future planning and decisions will
provide opportunities and benefits to member countries. RCEP is not only trade agreement
between countries but also strengthen their relations, so they can enjoy more benefits.
ultimately developing countries has a greater opportunity to increase their GDP, employment
rate and it will be reduced poverty line.

https://home.kpmg/cn/en/home/insights/2020/11/china-tax-alert-37.html

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https://www.cnbc.com/2020/11/16/rcep-15-asia-pacific-countries-including-
china-sign-worlds-largest-trade-deal.html
https://www.business-standard.com/about/what-is-rcep
https://www.thefinancialexpress.com.bd/views/rcep-agreement-may-boost-
foreign-investment-in-the-time-of-pandemic-1605537817

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