Amid rising protectionism and challenges to globalization, exemplified by US-China trade tensions and the United States’ withdrawal from multilateral trade agreements, the Regional Comprehensive Economic Partnership (RCEP)—the world’s largest free trade agreement—emerges as a promising symbol of renewed commitment to multilateralism.
- The Regional Comprehensive Economic Partnership (RCEP) is a beacon of hope for the future of multilateralism, as the largest free trade agreement uniting 15 economies, and led by regional middle powers like ASEAN, it has the potential to redefine trade liberalization amidst rising protectionism.
- The invocation of the China+1 strategy by countries like Japan and Australia aims to diversify global supply chains and strengthen economic ties with other ASEAN countries, mitigating risks associated with over-reliance on a single market.
- ASEAN’s consensus-driven approach plays a pivotal role in fostering dialogue and cooperation among its member states, emphasizing the value of collaboration over confrontation, and enabling countries with varying political systems to participate in joint initiatives.
Led by regional middle powers like ASEAN, RCEP unites 15 economies, including China, Japan, South Korea, and ASEAN members. The agreement has shown positive results, such as increased intra-ASEAN trade and potential to lift millions to middle-class status by 2035. The text also mentions the China+1 strategy adopted by countries to diversify supply chains and reduce dependence on China. The importance of RCEP lies in its inclusivity, pragmatic approach to multilateralism, and its role as a stabilizing force against rising protectionism. The text concludes by emphasizing the role of middle powers like ASEAN in shaping the future of globalization and the importance of collaboration over confrontation.
Trade tensions between the US and China have led to the US doubling duties on Chinese goods to 20%; China has responded by imposing 15% tariffs on US goods. The US also announced a round of tariffs on neighbouring countries such as Mexico and Canada. This includes 25% tariffs on imports from Mexico and Canada, as well as 25% tariffs on all steel and aluminium imports. Subsequently, Canada and the EU imposed retaliative steel and aluminium tariffs against the US. More potentially damaging trade measures from affected countries are expected.
What is RCEP and what does it do?
The Regional Comprehensive Economic Partnership (RCEP) is the world’s largest free trade agreement, uniting 15 economies, including China, Japan, South Korea, and members of The Association of Southeast Asian Nations (ASEAN). It is emerging as a beacon of hope for the future of multilateralism. Led by regional middle powers like ASEAN, an organization that advocates for consensus-driven and non-interference policies, RCEP could potentially redefine the framework of trade liberalisation, instilling a sense of optimism in the face of rising protectionism.
This year marks the third year since RCEP’s implementation. Intra-ASEAN trade increased by more than 7% in 2024 after a decline in 2023. Overall regional trade has also strengthened. At this trajectory, RCEP has the potential to uplift 27 million additional people to middle-class status by 2035; its effect is expected to grow incrementally for the next 10 to 15 years, by which point 90% of the goods within the agreement will achieve zero tariffs. It is set to foster the cross-border exchange of talent, knowledge, and capital between developing and developed Asia, offering hope for improved global relations.
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