RCEP: A Trade Opening for Australia
The impacts on Australia and surrounding Asia-pacific Nations
The Regional Comprehensive Economic Partnership (RCEP) is being doped the world’s largest trade deal. With the major countries already in this partnership residing in the Asia-Oceania region, it is no surprise that Australia jumped to sign the deal with its neighbouring countries. With Australia agreeing to the RCEP, there are now 15 countries included which produces one-third of the world’s GDP and one-third of the world’s total exports.
The countries involved with the partnership are Australia, China, Japan, South Korea, New Zealand and the ten nations of the ASEAN including Indonesia and Vietnam.
Although Australia and the 14 other nations have signed into the partnership; it has not come easy. The RCEP has taken eight years to negotiate and surpasses the previous Trans-Pacific Partnership (TPP) after the United States withdrew from the agreement in January 2017 under the Trump Administration.
Benefits for Australian Importers and Exporters:
Australia is committed to fully harnessing the power of RCEP as soon as possible so that Australian farmers, business and investors can start to access the benefits of this agreement. The benefits of this agreement are:
- Farmers & Exporters – Set group of exporting rules and regulations for all 15 nations
- Service Exporters – With the signing of RCEP, there is an opportunity for the services exporter industry to grow due to significant new access to financial, banking, aged care, health care, telecommunications and education.
- Ease of Business – Through a universal set of standards and rules across the partnership, this will allow for easier trade flow between nations.
- Improved tactics for non-tariff barriers – Specifically for areas such as customers procedures, quarantine and technical standards.
- Certainty – There is greater investment certainty for businesses looking to expand into participating nations.
- Ecommerce – A common set of rules that make it easier for businesses to trade online and operate internationally.
Specifically from a freight forwarders perspective, the RCEP agreement is strong in benefits for the Australian community. By accessing this free trade agreement, Australian importers and exporters will be able to access a stronger trade network within the participating nations. This agreement will also allow businesses to have the ability to expand into global markets. This also comes with investment certainty due to the strength of the partnerships in the RCEP. For freight forwarders this is promising as a we can continue to assist importers and exporters in the transportation of their products domestically and internationally. With this free flow of trade, an increase in exports and imports to and from Australia to the RCEP nations is likely to increase. Overtime as outside nations join the RCEP, this will continue to bring opportunity and growth for logistics and freight forwarders transporting goods.
Impact of RCEP on global supply chains:
All countries participating in the RCEP agreement provides concrete market access and investment commitments through simplified rules and processes for nations through the single arrangement.
Through this simplified rules and processes, this eliminates the problem of ASEAN nations becoming entangled with multiple free trade agreements (FTA) and applying different rules to each country or trade type. With RCEP, one set of rules is applied to all in agreement.
RCEP will have a positive impact on global supply chains due to its potential for significant opportunities for participating countries. As the partnership encompasses 45% of the world’s population and one-third of the global domestic product (GDP), future opportunities will continue to present themselves as more nations enter the agreement and as trade networks between the current RCEP countries grows.
The RCEP will also positively impact global supply chains by lowering trade barriers and improve market access for goods and services. This is attractive to international companies looking for their next step in global expansion.
Our CEO’s Thoughts
The RCEP is an Asia centric ecosystem where trade is boosted intra-Asia through reduced tariffs which allows for goods to be trades more freely. The powerful RCEP is also an opportunity for China to spread its influence throughout Asia to continue its hold on being the economic powerhouse in the region. In reality, China is the most lucrative market in Asia and every country wants to expand its economy by selling to China with eliminated or reduced tariffs.
For Australia, this will mean that China will become an even more important trading partner and allow for greater access to the huge market for more Australian industries. This greater access will also come without the burden of any tariff barriers and protectionism.
Overall, this partnership is positive for the Australian economy and poses many benefits to our importers and exporters.