New Trade Agreement Could Herald New Growth Era For Ship Owners
According to Mr. Yiannis Vamvakas, Research Analyst at Allied, “the Regional Comprehensive Economic Partnership (RCEP), (as the agreement was named) is a deal between the 10 members of the ASEAN nations (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and China, Japan, South Korea, Australia and New Zealand. In an attempt to conceive the essence of such a deal, it is insightful to examine some figures. In GDP terms, the participated countries consist of one third (around 32%) of world GDP, while the affected population reaches close to 2.2 billion people, making it the largest free trade agreement to date. Finally, according to data from the WTO, the partnership accounts for around 27% of global trade in goods and commercial services. All these figures are highlighting the impact and importance the Regional Comprehensive Economic Partnership will have on the global economy.
Vamvakas added that “it is estimated that the RCEP will result in around US$186 billion being added to the global economy, while nations involved will see an approximate rise of 0.2% in their GDP (based on estimates from Johns Hopkins University). The agreement is likely the first step that could lead to an established trading zone in the region similar to the one in the EU, as the agreement is expected to lower tariffs amongst participating nations, limit barriers for the service sector and investments, as well as shape common trade rules and customs administration. Even more interesting is the fact that this trade liberalisation agreement is coming during a period in which the world has been moving away from globalisation and free trade”.
“However, it is worth mentioning that specific details have not yet been announced, and it is still questionable if it will include large tariff reductions. One of the highlights of this agreement is the milestone event that brings the three major economies of the region, China, Japan and S. Korea closer than ever before, defying the geopolitical tensions they share. In the meantime, attention is spread beyond participating members, as the agreement would be even more colossal had India not withdrawn from the talks in 2019. India’s concerns were focused on China’s dominating position, something that could lead to an influx of Chines products in the country. However, the door still remains open from RCEP members, giving the opportunity for New Delhi to join the partnership in the coming years. Meanwhile, another significant aspect, is the withdraw of the USA from the Trans-Pacific Partnership during the Trump administration, which along with RCAP, are anticipated to diminish US influence in the region further. However, it will be interesting to see what the new Joe Biden administration will do in this regard”, Vamvakas noted.
“With regards to the next steps of the agreement, it is expected that the full enforcement of the partnership will take some time, as the agreement has to be ratified from all the members within the next two years, while extra flexibility in this regard may be given to less-developed members to make all the legislative changes needed. Thus, the economic benefits may not be prompt, but in the long-term the promise in terms of trade and economic growth is still significant”, Allied’s analyst concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide