The Regional Comprehensive Economic Partnership (briefly “RCEP”) is a free trade agreement executed by ten ASEAN countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) and 5 other countries (Australia, China, Japan, New Zealand, South Korea) with the aim of promoting relations between the said countries.
The agreement, executed on 15th November 2020, will enter into full effect after it is ratified by each party in accordance with their respective domestic laws.
The most notable aspect of the agreement is that the participating countries constitute about 30% of global GDP and 30% of the global population. So, we can say that the agreement is the biggest free trade agreement in the world. Because the RCEP is the first Free Trade Agreement between China, Japan, and South Korea, three of the four largest economies across Asia. The agreement is also the first multilateral free trade agreement in which China is involved.
Objective of RCEP Agreement
The main objective of the RCEP agreement is to establish a modern, comprehensive, high-quality, and mutually beneficial economic partnership that will facilitate the expansion of regional trade and investment and contribute to global economic growth and development. The agreement aims to reduce the products that RCEP countries will receive from outside by 65 percent, and then increase this figure to 90 percent. Therefore; the RCEP agreement, which removes the customs walls between the countries that executed the agreement, is expected to lead the exports of the United States and European countries to the region to decrease at very serious rates.
Important Topics of the RCEP Agreement;
- It is envisaged, under the agreement, to gradually reduce or eliminate customs duties, increase mutual investments, and free movement of commercial goods across the region.
- The objectives of the agreement include simplification of customs procedures and harmonization of customs procedures with international standards.
- Agreement on human, animal or plant life or health to protect trade and SPS measures to facilitate trade by minimizing negative effects on development, reveals the basic framework for adoption and implementation.
- By significantly removing restrictive and discriminatory measures affecting the trade in services, it aims to open up more ways for the trade in services between the parties.
- RCEP also contains provisions on intellectual property rights. These provisions provide protection of intellectual property rights beyond the level of the WTO Agreement, including the provisions on the trade-related aspects of intellectual property rights, as well as the provisions on enforcement of Criminal Procedure and penalties in case of infringement of intellectual property rights. Furthermore; it also includes the provisions on regulation and alignment of the procedures in relation to establishment of the intellectual property rights such as the ones on filing of applications electronically and provision of any and all related information on online basis in order to support the owners of the intellectual property rights. This is a very important issue as many of the RCEP signatories are production centers for various high-tech products.
Possible Effects of the Agreement on Turkey
RCEP and Turkey and the EU's exports to the countries participating in the RCEP agreement are expected to decrease significantly over the next 20 years. Because upon execution of this regional agreement, almost a third of the world economy is expected to form a trade block. [1]
Although Turkey has bilateral trade relations with China, South Korea and Japan, Turkey does not have great economic ties with the RCEP signatories.
In 2019, Turkey realized half of its total exports of about 170 billion dollars to EU countries, while it exports only 7 billion 168 million dollars to the RCEP countries. Imports from RCEP countries reached 36 billion 108 million dollars. Turkey, which gave a foreign trade deficit of 31 billion dollars in 2019, gave 28 billion 940 million dollars of this foreign trade deficit to RCEP countries. Turkey gives foreign trade deficit to 12 of the 15 RCEP member countries. [2]
Therefore, it seems likely that Turkey will be in an axis shift towards the EU. Of course, within the framework of political relations, Turkey can also try to intensify bilateral trade agreements as part of the development of trade relations with RCEP signatories.
Att. Serdar Darama
References:
1. https://rcepsec.org/2020/11/26/rcep-asia-pacific-countries-form-worlds-largest-trading-bloc/
2. https://www.dw.com/tr/t%C3%BCrkiye-ab-ili%C5%9Fkilerinde-rcep-etkisi/a-55767630
