REGIONAL COMPREHENSIVE

ECONOMIC PARTNERSHIP (RCEP):

ECONOMIC POTENTIAL?

PREPARED BY:
NUR FARHANA BINTI ABD HAMID 2016642022
NUR ANIS NATASYA BINTI SAMSUDIN 2016641966
NUR LIYANA HAZWANI BINTI SABERI 2016639826
NUR SYAZWINA BINTI MD AZAHAM 2016642466
MUHAMMAD FAUZI 2016642382
PI007U7
PREPARED FOR: SIR MUHAMMAD FALIQ BIN ABD RAZAK
 ABSTRACT
The Regional Comprehensive Economic Partnership (RCEP) is an ASEAN-led FTA.
In this paper, we are focusing on RCEP, its goals and focus areas. Currently, RCEP
is under negotiation guided by the Guiding Principles and Objectives of
Negotiating RCEP. RCEP brings a lot of possible benefits towards the economy of
the participating countries including economic growth. However, there are still
some challenges that have to be dealt with throughout its negotiation process.
Overall, if RCEP is negotiated and executed efficiently, it will bring great
economic potential to its member states.

Keywords: RCEP, ASEAN, FTA, economic growth

INTRODUCTION
A free trade agreement (FTA) agreement between two or more countries with the aim
of liberalizing the trade of goods and services and access to investment between those
countries.
During the 19th ASEAN Summit in November 2011, it was decided establish a region-wide
FTA, namely Regional Comprehensive Economic Partnership (RCEP) involving 16
countries.
RCEP is expected to support the growing production network and aims to address the
noodle-bowl situation the region.
In May 2013, the negotiation for the Regional Comprehensive Economic Partnership
(RCEP) began taking place.
The objective of launching RCEP negotiations is to achieve a comprehensive, high-
quality and mutually beneficial economic partnership agreement among the ASEAN
Member States and ASEAN’s FTA Partners.
 CONTENTS
1. WHAT IS RCEP? (OVERVIEW)

2. ECONOMIC BENEFITS OF RCEP

3. RCEP AND ECONOMIC GROWTH

4. RCEP’S AREAS OF NEGOTIATION

5. CHALLENGES ARISE FROM NEGOTIATIONS OF

RCEP
OVERVIEW OF RCEP
 OVERVIEW OF RCEP
Centred on ASEAN and the six countries which it already has plurilateral free
trade agreements (PTAs).

RCEP grew from two FTA proposals in 2006 and decided to combine these two
proposals into a single ASEAN-led initiative in 2011. Negotiations began in May
2013.

RCEP member economies are likely to account for 30% of the world’s economy
48% of the global population.

RCEP signifies an unprecedented regional economic cooperation arrangement

among 16 predominantly developing countries.
(Wilson, 2015)
(Basu Das, 2015)
 RCEP OVERVIEW:
GOALS AND FOCUS AREA
RCEP’s primary goal is to multilateralise regional trade system by combining
ASEAN-plus FTA’s into a single agreement.

According to a 2013 principle statement, the key focus in on trades in goods

then to negotiate further for tariff reductions.

RCEP seeks on the addressing the noodle-bowl problem arise from overlapping
and inconsistent FTAs.

(Wilson, 2015)
RCEP OVERVIEW: GUIDING PRINCPLES AND
OBJECTIVES FOR NEGOTIATION
The negotiating parties agreed that RCEP will affirm the principle of ‘ASEAN
Centrality’ in Asian regionalisation.

The objective of negotiating RCEP is to achieve a comprehensive, high quality,

and mutually beneficial economic partnership agreement among the ASEAN
Member States and ASEAN’S FTA partners.

The guiding principles, (negotiation areas) include trade in goods, services, and
investment, economic and technical cooperation, intellectual property,
competition, and dispute settlement, and aims for significant improvements
over the existing ASEAN+1 PTAs.

(ASEAN, 2016)
(Wilson, 2015)
RCEP GUIDING PRINCPLES FOR NEGOTIATION

(ASEAN, 2016)
ECONOMIC BENEFITS OF RCEP

Trade in services
Increase the trade
wherein possible and
flows among the
existing restrictions and
participating parties as
discriminatory
trade barriers are
measures within RCEP
minimized.
are eliminated.

(Cororaton, 2015)
ECONOMIC BENEFITS OF RCEP

Positive output effects in

Generates country
the service sectors:
level results on transportation sector
employment sector, as which benefits from the
well as on factor prices: improvement of
wages of skilled and agriculture and
unskilled labour manufacturing.

(Cororaton, 2015)
RCEP AND ECONOMIC GROWTH: ITS
ECONOMIC REASONS
An opportunity to deepen the liberalization commitments in trade in goods,
services, investments and rules of origin (ROO).

Ease the ‘noodle-bowl’ situation in a variety of rules and commitments.

.
ASEAN will gain more economic benefits from RCEP instead of CJK-FTA

(Fukunaga, 2013)
Three giant economies in East Asia are involved in RCEP.
(China, Japan and Republic of Korea)

RCEP countries are among the fastest growing countries in the world.
(Australia, Republic of Korea, New Zealand)

RCEP economies account for more than 3.4 billion people with a combined
gross domestic product (GDP) of about US$22 trillion(RM89.4 trillion).
-It accounts for nearly 30% of global trade and 30% of global FDI.
(Petri, 2012)
(Lewis, 2013)
(MITI, 2016)
RCEP’S POTENTIAL ECONOMIC
GROWTH UPON COMPLETION
◦ HSBC economists estimate that the completion of RCEP will generate
economic benefit of about US$600 billion or 1.8 percentage points of GDP to
its members.

◦ Income of ASEAN countries is projected to go up by around 3% under RCEP by

2025.

(MITI, 2016)
RCEP WILL INCREASE GDP

(Basu Das, 2015)

RCEP AREAS OF NEGOTIATION
1. TRADE IN GOODS
◦ The RCEP will aim at progressively eliminating tariff and non-tariff barriers on
substantially all trade in goods in order to establish a free trade area among the
parties.

2. TRADE IN SERVICES
◦ The RCEP will be comprehensive, of high quality and substantially eliminate restrictions
and/or discriminatory measures with respect to trade in services between the RCEP
participating countries.
3. INVESTMENT
Negotiations for investment under the RCEP will cover the four pillars:
a. promotion,
b. protection,
c. facilitation
d. liberalization.

4. ECONOMIC AND TECHNICAL COOPERATION

RCEP will aim at narrowing development gaps among the parties and maximizing mutual
benefits from the implementation of the RCEP agreement.

5. INTELLECTUAL PROPERTY
RCEP will aim to reduce IP-related barriers to trade and investment by promoting
economic integration and cooperation in the utilization, protection and enforcement of
intellectual property rights.
6. COMPETITION
Provisions on competition will form the basis for parties to cooperate in the promotion :
a. competition,
b. economic efficiency,
c. consumer welfare and
d. the curtailment of anti-competitive practices

7. DISPUTE SETTLEMENT
RCEP will include a dispute settlement mechanism that would provide an effective,
efficient and transparent process for consultations and dispute resolution.

8. OTHER ISSUES
The RCEP negotiations will consider including other issues covered by FTAs among RCEP
participating countries, which may be identified and mutually agreed in the course of
negotiations, and take into account new and emerging issues relevant to business
realities.
CHALLENGES ARISE FROM NEGOTIATIONS OF RCEP
The wide diversity in economic size and development stage among
negotiating members.

RCEP is expected the consolidate the five ASEAN+1 FTAs and be modelled
after the best, which is the ASEAN-CER FTA.

Agriculture remains a bugbear in the RCEP negotiations, as the membership

comprises both countries that are efficient agricultural exporters (Australia, New
Zealand, Thailand, China) as well as those that have highly sensitive protected
agricultural sectors (Japan, South Korea, India).

Resolving the “noodle bowl problem” could prove difficult.

In need to maintain ASEAN centrality.

(Chia, n.d)
CONCLUSION
In conclusion, RCEP has great potential in gaining benefits especially in the economic
aspect for negotiating countries namely ASEAN+6. RCEP is a perfect platform in
achieving economic integration as it seeks to harmonise the rules and regulations across
the multiple and overlapping PTAs in the region. In the end, RCEP could possibly create
the ultimate free trade area of the Asian Pacific Region if it is executed efficiently. All
participating countries must give the most consideration and cooperation to pave the
way for ASEAN leadership in achieving the goals of RCEP.
REFERENCES
Aggrawal, V.K. (2015). Mega-FTAs and the Trade-Security Nexus: The Transpacific Partnership (TPP) and Regional
Comprehensive Economic Partnership (RCEP). Retrieved February 16, 2017 from
http://web.b.ebscohost.com.ezaccess.library.uitm.edu.my/ehost/detail/detail?sid=53b904e2-be4b-4cc5-
824778902431c089%40sessionmgr104&vid=0&hid=115&bdata=JnNpdGU9ZWhvc3QtbGl2ZSZzY29wZT1zaXRl#AN=1
14680581&db=aph

Association Of Southeast Asian Nations (ASEAN). (2016, October 3). Regional Comprehensive Economic Partnership
(RCEP). Retrieved from http://asean.org/?static_post=rcep-regional-\comprehensive-economic-partnership

Basu Das, S. (2015). The Regional Comprehensive Economic Partnership: New paradigm or old wine in a new
bottle? Asian‐Pacific Economic Literature, 29(2), 68-84. Retrieved February 14,2017 from
http://web.a.ebscohost.com.ezaccess.library.uitm.edu.my/ehost/detail/detail?sid=7dcd83e0-0fee-44fc-ab49-
cf841a23186d%40sessionmgr4008&vid=0&hid=4207&bdata=JnNpdGU9ZWhvc3QtbGl2ZSZzY29wZT1zaXRl#AN=154
4536&db=eoh

Chia, S.Y. (n.d.). Senior research fellow Singapore Institute of International Affairs (SIIA). Realisation of AEC byEn 2015 and
challenges in RCEP negotiations. Retrieved on February 15 from
http://www.aseancenter.org.tw/upload/images/outlook/012/03Realisation%20of%20AEC%20by%20end.pdf
Coloration, C.B. (2015). “Potential Effects of the Regional Comprehensive Economic Partnership on the Philippine
Economy.” Philippine Institute for Development Studies. pp. 2-67. Retrieved from
http://dirp3.pids.gov.ph/websitecms/CDN/PUBLICATIONS/pidsdps1630.pdf

Fukunaga, Y. (2015). ASEAN’s leadership in the Regional Comprehensive Economic Partnership. Asia & the Pacific
Policy Studies, 2(1), 103–115. Retrieved from http://doi:10.1002/app5.59

Gantz, D.A. (2016). The TPP and RCEP: Mega-Trade Agreement for the Pacific Rim. Arizona Journal of International
& Comparative Law 33(1),57-70. Retrieved on 2 February 2017, from
http://www.heinonline.org.ezaccess.library.uitm.edu.my/HOL/Page?handle=hein.journals/ajicl33&div=9&st
art_page=57&collection=journals&set_as_cursor=0&men_tab=srchresults

Guiding Principles and Objectives for Negotiating the Regional Comprehensive Economic Partnership. Available
at http://asean.org/storage/2012/05/RCEP-Guiding-Principles-public-copy.pdf (accessed 10 February
2017).

Lewis, M.K. (2013). The TPP and the RCEP (ASEAN+6) as potential paths toward deeper Asian economic
integration. Asian Journal of WTO & International Health Law, 8 (359-369). Retrieved February 9, 2017 from
http://www.heinonline.org.ezaccess.library.uitm.edu.my/HOL/Page?handle=hein.journals/aihlp8&div=17&s
tart_page=359&collection=journals&set_as_cursor=0&men_tab=srchresults
Petri, P.A. (2012). Economics of the TPP and RCEP negotiations. Retrieved from
https://piie.com/publications/wp/wp16-2.pdf

Ministry of International Trade and Industry (MITI) on RCEP as Key Driver of Global Economic Growth. (2016,
August 16). Vientiane, Lao Pdr. Retrieved from
http://www.miti.gov.my/miti/resources/RCEP_As_Key_Driver_Of_Global_Economic_Growth.pdf

Wilson, J.D. (2015). Mega-regional trade deals in the Asia-Pacific: Choosing between the TPP and RCEP?
Journal of Contemporary Asia, 45(2), 345-353. Retrieved February 15, 2017 from
http://web.b.ebscohost.com.ezaccess.library.uitm.edu.my/ehost/detail/detail?vid=8&sid=2fa8b0b
e8e2a4d6db1a9deabe38f11aa%40sessionmgr101&hid=115&bdata=JnNpdGU9ZWhvc3QtbGl2ZSZz
Y29wZT1zaXRl