The successful signing of RCEP is the biggest step taken so far to realize the concept of "Asia-Pacific Free Trade Area" proposed at the 2014 APEC Leaders' Informal Meeting.
After eight years of negotiations, East Asia has also had its own free trade agreement, which is the world's largest free trade agreement.
On November 15, the fourth leaders meeting of the Regional Comprehensive Economic Partnership (RCEP) was held via video. At the meeting, under the witness of leaders of 15 countries, trade ministers of various countries signed RCEP. It is worth noting that India, as one of the initial negotiators, did not appear in the list of signatories to this agreement.
In November last year, India withdrew from the ministerial negotiations in the final sprint on the grounds that it was difficult to meet the requirements in terms of tariff concessions and non-tariff barriers, which caught the remaining 15 negotiators by surprise.
At that time, despite the good news in India, some Indian netizens said, "Free trade is the only way to innovate and develop the industry. Otherwise, it will only breed complacency and harm the long-term economic development."
"The fact is that India is doing this to protect big companies, not to safeguard national interests. It is basically to protect the owners of big companies, not to benefit ordinary people by obtaining cheaper goods."
On November 2, in New Delhi, India, vendors sell cauliflower.
Whether or not to retain India has become a difficult problem before 15 negotiations. Fortunately, when the RCEP was signed this time, India left a "back door"-welcome to "return to the team" at any time. The leaders’ joint statement reaffirmed that India can participate in RCEP meetings and economic cooperation activities with RCEP signatories as an observer.
After the RCEP was signed on the 15th, the Indian media expressed their regret, saying that “India has become extremely protectionist in the past few years, and India cannot afford the consequences of doing so”.
Junichi Sugawara, a senior researcher at the Mizuho Research Institute in Japan, has repeatedly mentioned in previous interviews with CBN reporters that he is optimistic about signing the RCEP without India joining by the end of this year, and the strategy for urging the return of India can be " The 15 countries sign the contract as soon as possible so that India can realize the disadvantages of not joining, so as to promote its change of policy."
Deeply bound India and Japan
Since the start of RCEP negotiations in 2012, Japan has been actively pulling India into "participation", and once deeply tied its position with India. Therefore, it is not difficult to understand that after the news of India's withdrawal from RCEP negotiations at the end of last year was made public, the attitude of the Japanese (Abe) government at that time was quite firm: Japan would not sign RCEP unless India returned to RCEP negotiations.
Japan's then Minister of Economy, Trade and Industry Hiroshi Kajiyama also held talks with the Indian officials responsible for RCEP negotiations during his visit to India in December 2019. Junichi Sugawara also said before that Japan originally hoped to use India as the pedal to strengthen economic ties with Africa and other regions. If India refuses to participate in the RCEP, Japan's motivation and significance for participating in the agreement will be greatly affected.
The Japanese government once resolutely "selected sides" with India, and had a disagreement with ASEAN's attitude towards RCEP at that time. Since the beginning of this year, Vietnam, Indonesia, Malaysia and other ASEAN countries have stated that “ASEAN has agreed to give priority to the signing of RCEP before the end of this year as scheduled” and “the progress of the RCEP agreement should not be hindered by India”.
As an important regional economy, Singapore’s attitude is also very important. In an interview with a reporter from China Business News, OCBC Bank Greater China Research Director Xie Dongming said that in the special period of the new crown pneumonia epidemic, it is even more necessary to deepen regional cooperation, so Singapore will continue to promote the RCEP process as always.
On the one hand, ASEAN, which is determined to complete the RCEP signing within this year, on the other hand, India, which refuses to participate. Japan’s position on RCEP was finally clarified at the last moment: at the beginning of July, the World Trade Organization (WTO) had the fourteenth against Japan. At the second trade policy review meeting, officials from the Japanese Ministry of Foreign Affairs stated that Japan will strive to sign the RCEP before the end of the year.
This is the clearest statement made by Japan on joining this regional agreement since India’s withdrawal from RCEP at the end of last year.
People wear masks on a trip in Tokyo, Japan, on October 30.
When Japan chose to embrace RCEP, India still insisted on its original decision. A few days before the RCEP was signed, Riva Ganguly Das, a senior official of the Indian Ministry of Foreign Affairs, reiterated the old tune on November 12: “As far as India is concerned, we did not join the RCEP because it did not resolve important issues and issues for India. Worries.” The “problems and concerns” that India considers are that banks, service industries, and Internet innovation industries, which it believed to be highly competitive in the past, quickly lost out in the face of competition from foreign companies. Other industries in India, which are inherently less competitive, cannot withstand the impact of market opening.
Junichi Sugawara also said that India is very hesitant to open up its agricultural and manufacturing markets. In addition, this year's new crown pneumonia epidemic has severely damaged the Indian economy, which further reduces the possibility of India's participation in RCEP.
Liu Zongyi, secretary-general of the China-South Asia Cooperation Research Center of the Shanghai Institute of International Studies, also stated that India had previously signed free trade agreements with ASEAN, South Korea and Japan, but after signing, the trade deficit with these countries or regions has not narrowed but has Expanded, "In other words, India believes that joining the free trade agreement may not be a good thing for India."
Japan's compromise
Regarding Japan’s final transformation, Chen Zilei, vice president of the National Japanese Economic Association and director of the Japan Economic Center at Shanghai University of International Business and Economics, told Yicai.com reporters, “Based on the current COVID-19 pandemic has not yet dissipated, the international economy continues to decline, and coupled with the conflict with foreign countries After considering the relationship between the major economy and the United States, the Japanese government made a compromise choice."
Chen Zilei believes that the signing of the RCEP means that the Yoshihide Suga administration will have "more confidence" when discussing deepening the Japan-US Free Trade Agreement with the next administration of the United States.
"It can be seen from the signing of RCEP that the current Yoshihide Suga government still adheres to the'Abe line.' One of the main principles of the latter's foreign strategy is to adhere to multilateralism and free trade." He said, "From Japan's national policy and development direction From a standpoint, we must rely on external demand. The signing of RCEP is actually conducive to the recovery of the Japanese economy."
According to the latest data released by the Cabinet Office on November 16, 2020, from July to September 2020, excluding the impact of price changes, Japan’s gross domestic product (GDP) for the current quarter increased by 5.0% compared to the second quarter, calculated at an annual rate. The increase was 21.4%, the largest increase since comparable data.
Japanese industry and economic circles also welcomed the signing of RCEP for the first time, believing that this agreement will not only expand investment and trade in the Asia Pacific region, but also help strengthen the supply chain throughout Asia.
It is worth noting that nearly half (46%) of Japan’s foreign trade volume was completed with RCEP members. As early as 2017, it established an Economic Partnership Agreement (EPA) with ASEAN. Why does Japan need to invest in RCEP? Embrace? In this regard, Chen Zilei said: "Not participating in RCEP is not conducive to Japan's economic and political considerations."
Currently, through RCEP, Japan has established de facto free trade relations with China and South Korea. "Actually, Japan was very contradictory about signing free trade agreements with China and South Korea." Chen Zilei said, "For China, Japan hopes to use external factors to push the Chinese market to open more to Japan; for South Korea, Japan and South Korea are in the global industrial chain. China’s status is relatively close and there is more competition with each other. This time, Japan still made a statement that is conducive to the future development of the region. This is a very pragmatic performance of Japan’s diplomacy.
Outline the road map of the Asia-Pacific Free Trade Zone
An interpretation article released by the Ministry of Commerce on the 15th stated that RCEP is currently the world's largest free trade zone. In 2019, the 15 member states of RCEP have a total population of 2.27 billion, a GDP of US$26 trillion, and a total export value of US$5.2 trillion, each accounting for about 30% of the global total. The completion of the RCEP free trade zone means that about one-third of the world's economy will form an integrated market. RCEP includes major countries in East Asia and will inject strong impetus into regional and global economic growth.
"The Economist" think tank’s chief analyst in the field of global trade, Nick Marro, told China Business News: “RCEP provides a very interesting perspective for observing the interaction between trade and tariffs in Northeast Asia. This is the first The free trade agreement that Japan and South Korea brought together. The interaction of the three parties highlights the economic significance of this agreement. The follow-up will see how RCEP breaks through the legislative bodies of the member states."
Street view of Jakarta, the capital of Indonesia, the largest economy in Southeast Asia. (The pictures in this article are from Xinhua News Agency)
The comrade in charge of the International Department of the Ministry of Commerce interpreting the "Regional Comprehensive Economic Partnership Agreement" (RCEP) third published on the 17th pointed out that according to the provisions of RCEP, at least 9 of the 15 members must approve the agreement to enter into force, including at least 6 ASEAN member countries and at least 3 countries among China, Japan, South Korea, Australia and New Zealand. In view of the signing of the agreement, each member of RCEP will perform their own domestic legal approval procedures to promote the early implementation of the agreement.
Chen Zilei told China Business News that the successful signing of RCEP is the biggest step so far to realize the concept of "Asia-Pacific Free Trade Area" proposed at the 2014 Asia-Pacific Economic Cooperation (APEC) Informal Leadership Meeting. At that time, Chinese President Xi Jinping stated that the meeting decided to start the Asia-Pacific Free Trade Area process and approved the APEC’s road map to promote the realization of the Asia-Pacific Free Trade Area. This was a historic step towards the realization of the Asia-Pacific Free Trade Area and marked the Asia-Pacific Free Trade Area. The official launch of the free trade area process reflects the confidence and determination of APEC members to promote regional economic integration.
The Ministry of Commerce has stated that there are many ongoing or completed free trade zone negotiations in the Asia-Pacific region. "The development of these free trade areas will lay the foundation for the establishment of an Asia-Pacific free trade area in the future."
