The world’s biggest trade deal was just signed, but what is the RCEP and its significance?

We ask 8 CKGSB MBA alumni from 8 RCEP member states.

On November 15 2020, after eight years of negotiations, 15 Asia-Pacific nations including China, Japan, South Korea, Australia, New Zealand and the ten ASEAN countries, signed the Regional Comprehensive Economic Partnership Agreement (RCEP). The landmark agreement is now the world’s largest free trade agreement and is set to shape global economics and politics. It accounts for a population of 2.3 billion- almost one-third of the world’s population, US$25.6 in total gross domestic product (GDP)- about one-third of total global GDP, and an intra-regional trade volume of US$10.4 trillion, accounting for 27.4% of total global trade volume.

The objective of the RCEP Agreement is to establish a comprehensive and mutually beneficial economic partnership that will aid the expansion of regional trade and investment, and contribute to global economic growth and development. This serves as an important signal to investors, that the region is still determined to promote high-quality, multilateral trade and investment integration.

The RCEP Agreement also highlights China’s determination to stimulate regional economic flows and maintain free trade. The combination of the agreement and the “Belt and Road” initiative will assist China’s efforts in building an economic area that is conducive to investment and trade. It will also further promote the coordinated development of regional economies by strengthening the interconnection in transportation, energy and communications amongst other fields.

Since its establishment in November 2002, Cheung Kong Graduate School of Business (CKGSB) has aimed to cultivate transformative business leaders with a global vision, a humanistic spirit, a strong sense of social responsibility and an innovative mind-set. As a leading business school in Greater China, CKGSB is transforming itself into a truly global business school. In line with the goals and objectives of the RCEP Agreement, CKGSB has been positioning itself for East Asia (China, Korea, Japan and ASEAN countries) with unmatched insight and alumni networks, a global ecosystem for next-generation economic disruptions that promotes entrepreneurship and innovation, and an emphasis on social innovation to inspire future business leaders to be socially minded.

So what does the signing of the RCEP Agreement mean to member states? We asked 8 of our CKGSB MBA students and alumni, from 8 RCEP member countries to share their views:

Charlie Chen
CKGSB Global MBA 2018
Australia

“RCEP is an extremely significant milestone in world history. This is a unique opportunity for the Asia Pacific region to collectively build the foundations of a prosperous, post pandemic world. It is undeniable that the Asia Pacific region will continue to play an increasingly vital role in the global context especially as we consider the sheer population, economic growth, technological and business model innovation occurring in the region. 

This however, is just the beginning of a longer journey ahead. There is still a lot of ground to be covered and all parties within the public and private sectors will need to play a role in collaboratively shaping the future of not just the Asia Pacific region, but of the world. I am looking forward to contributing to and seeing the positive outcomes following the implementation of the RCEP for the benefit of people, businesses and communities both in the region and beyond for many years to come.”

Phil Park
CKGSB Global MBA 2020
South Korea

“Overall, as a Korean, I welcome Korea’s participation in the RCEP. The Korean economy is heavily dependent on international trade, with around 70% of Korean GDP coming from foreign trade. Since the global trend of free trade benefits Korea, I think Korea should be the one that leads various free trade agreements. Nevertheless, we need to look at the other side of it. 

Another FTA participation will provoke increased competition in the economy, and will weaken the relatively uncompetitive industries, such as agriculture and primary manufacturing. Therefore, the Korean government should find practical methods to protect uncompetitive fields.”

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Raymond Tan
CKGSB Global MBA 2015
Malaysia

“As an entrepreneur in Malaysia, I see plenty of opportunities from the RCEP. In the short term, the main benefit will be increased trade with China, which is one of the few countries in the world that still has positive economic growth. Given the fact that we are a trading nation and that most of our trade partners will probably continue being in recession over the next 1-2 years, more trade with China will be one of the main levers for the Malaysian economy to recover from the pandemic. In the longer term, the RCEP is the correct next step for our region to move towards an EU-style trade bloc. 

Having lived in Europe for 10 years, I have personally experienced the benefits of such a convenient free-trade arrangement. The reduction in red tape for intra-bloc import/export will make it so much easier for even small businesses to trade across the region. The biggest losers from this trade deal will be the countries that did not join in, since member countries will trade more with each other and less with non-member countries.”

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Shota Seiriki
CKGSB Global MBA 2021
Japan

“The RCEP will be a huge factor in promoting economic collaboration between member nations. There are estimates that the deal could increase global national income by $186bn annually by 2030, and add 0.2% to the economy of its member states. Both China and Japan will have a large influence in this. Given the significance of the agreement, I would like to understand more on it, as these rules and relationships will be increasingly important for us to compete and collaborate.”

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Allen Poon
CKGSB Global MBA 2020
Singapore

“In recent years, the global multilateral system that has upheld peace and prosperity over the past few decades has been weakened, amid backlash against globalization and renewed calls for trade and investment protectionism. This is concerning given that many of the world’s most pressing and complex challenges, including climate change and the spread of infectious diseases such as COVID-19, are transnational in nature and would require nations to cooperate. 

Against this backdrop, I am heartened by the announcement that fifteen Asia-Pacific countries in varying stages of development (including China and my home country, Singapore) have come together to sign the world’s largest trade agreement. In so doing, it sends a positive signal about their joint commitment to trade liberalization and regional economic integration. 

The fact that RCEP negotiations took eight years, shows just how tough it is to achieve consensus amongst a large and diverse group of countries. The signing of the RCEP sends a loud and timely message that if we all try hard enough and negotiate in good faith, it is eminently possible to set aside differences and partner with each other in the pursuit of mutually beneficial outcomes.”

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SUN Peizhen
CKGSB Global MBA 2020
China

“The signing of the RCEP brings certain benefits to each member country. The imbalances of internal demand and supply, can be balanced and promoted through trade between countries, thus driving the GDP of each member country. The overall development of member countries will also drive the development of other regions of the world. This is a very global move. As a student of the CKGSB Global MBA program, this is an opportunity for us, because we can better develop our global vision and cross-cultural communication ability.”

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Ahar Ti
CKGSB Global MBA 2020
Myanmar/

“On top of the current visa exemption agreement between ASEAN countries, I think it would be beneficial if the visa exemption was extended into the 5 other RCEP nations. I believe the free movement would better enhance trade and investment. For example, the visa exemption agreement would enhance the hospitality sector for all RCEP countries, with the free movement of people.”

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Hour LY
CKGSB Global MBA 2018
Cambodia

“During the COVID-19 pandemic, major export economies such as China, Japan and Korea have been unable to grow, even if the pandemic has been controlled in their countries. With the presence of the RCEP, it is easier for these countries to export their available resources to other RCEP nations. The RCEP also gives the 10 Southeast Asian countries a great opportunity to increase their exports and local investments, as they are able to take advantage of the tariff incentives and trade partnerships in the region. The sheer size of the new free trade zone itself is also significant, as it will be bigger than both the US-Mexico-Canada Agreement and the European Union.”

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