In the meantime, manufacturers in the more advanced countries of the RCEP bloc should consider how to minimize costs by outsourcing finishing to less prosperous ASEAN countries. The agreement aims to reduce tariffs and bureaucracy. It includes uniform rules of origin across the bloc that can facilitate international supply chains and trade in the region. [14] [15] It also prohibits certain tariffs. It does not focus on unions, environmental protection or government subsidies. [14] Critics have warned that RCEP could harm the single market by failing to protect small businesses. U Than Aung Kyaw said Myanmar and almost all signatories have had various free trade agreements with each other for more than 10 years, adding that RCEP simply integrates this process at an advanced level. He insisted that this would not harm local businesses in any way. The agreement also binds «rules of origin,» which are criteria for determining where a product was manufactured and whether it is subject to tariffs and duties. The Regional Comprehensive Economic Partnership (RCEP) Free Trade Agreement, signed on November 15, will boost foreign investment in low-wage and low-skilled ASEAN countries. Daw Aung San Suu Kyi said RCEP will be a new driving force that will accelerate trade and investment facilitation within a well-functioning, highly effective and rules-based multilateral trading system.
Nevertheless, RCEP is in many ways a first for its signatories. For Japan, China and South Korea – three regional economic powers with difficult bilateral relations – RCEP will be the first trade agreement to combine them into a single free trade agreement. For the region`s largest economy, China, RCEP is the largest non-bilateral trade agreement. One of the biggest of these barriers is the arrogance of non-tariff barriers. This is particularly true for agricultural exports, which account for 20 to 30 per cent of Myanmar`s total export earnings. China is Myanmar`s largest market for agricultural exports, but as formal trade is subject to sanitary and phytosanitary measures, most of Myanmar`s exports to the Chinese side are informal. This leads to the fact that they are subjected to periodic raids; More recently, China has taken phytosanitary measures to tighten pineapple imports, which has led to a considerable drop in prices in Myanmar. In addition, the announcement follows the Yuan-Kyat transaction program, which began on January 11, which allows traders to open foreign currency accounts with select banks – Bank of China Hong Kong, Industrial and Commercial Bank of China, Myanmar Economic Bank, CB Bank, Ayeyarwady Bank, UAB Bank and Myanma Apex Bank.
However, this does not only remove bureaucratic obstacles. Uniform rules of origin can also attract more investment to Myanmar, especially investment that requires labour-intensive supply chains. Uniform rules of origin mean that intermediate products manufactured with at least 40% of the region can be transported duty-free to all 15 RCEP countries. The system means that trade transactions between Myanmar and China no longer need to be settled in US dollars. When RCEP was signed, Chinese Premier Li Keqiang declared it «a victory for multilateralism and free trade.» [7] Singaporean Prime Minister Lee Hsien Loong described it as a «great step forward for our region» and a sign of support for free trade and economic interdependence. [15] YANGON – Myanmar has joined China, Japan and 12 other countries to form the world`s largest free trade area, accounting for about 30% of global GDP – in the hope that the agreement will boost trade by attracting investment to the region, expanding access for local SMEs to global manufacturing networks, and supporting the country`s economic recovery from COVID-19. U Than Aung Kyaw said that under the agreement, Myanmar will have sufficient time to prepare for full integration into the agreement, including by aligning with international standards of the framework and its procedures, and improving the capacity of government organizations and the private sector at the international level. MIFER said the RCEP agreement will provide a large market for Myanmar`s exports and opportunities for responsible and high-quality investment flows.
The recently signed trade agreement aims to deepen integration and reduce trade barriers between the 15 signatory states. Despite the enthusiasm generated by the signing of RCEP on 15 November, it will likely take up to two years for the trade pact to fully enter into force. For RCEP to enter into full force, at least six ASEAN member states and three non-ASEAN partners must take steps to ratify the agreement at the national level. In Myanmar, the new parliament must also ratify the agreement as soon as it meets early next year. Other countries included in RCEP, such as Japan, Australia and other ASEAN members, have not commented publicly on whether they will trade with Myanmar under RCEP. This means that for processes that require careful and labour-intensive involvement, such as garment finishing, uniform rules of origin under RCEP will lead to increased manufacturing investment in terms of finishing products such as clothing. This will lead to increased investor interest in countries where workers are cheaper and less skilled, such as Cambodia, Laos and Myanmar, and will be of particular interest to manufacturers in Australia, Japan, New Zealand, Singapore and South Korea, where production costs are higher. While there are reasons to welcome the signing of RCEP, part of the discussion so far in Myanmar seems to be overly optimistic about the benefits. A week after the signing, Minister of Investment and External Economic Relations U Thaung Tun wrote in state media that it was a «historic agreement» that «will strengthen our country`s trade and trade ties, including better access to the dynamic regional markets of Japan and South Korea, while increasing the flow of high-quality and responsible foreign investment.» State Counsellor Daw Aung San Suu Kyi also called RCEP a «milestone,» saying it «will represent a new driving force that will accelerate trade and investment facilitation within a well-functioning, highly effective and rules-based multilateral trading system.» He also reaffirmed Myanmar`s commitment to fully implement the agreement.
RCEP is the world`s largest free trade agreement, covering 30% of the world`s economic output and one-third of the world`s population. Although Myanmar is not the smallest signatory to RCEP in terms of population or economy, it is among the poorest in terms of GDP per capita. The government hailed Myanmar`s inclusion as an important development for future economic growth, and indeed the country could have much to gain. But what can we reasonably expect from this massive trade deal for the people of Myanmar, and what are the likely obstacles to the country reaping greater benefits? RCEP members represent nearly a third of the world`s population and generate nearly 30% of global GDP. The new free trade bloc will be larger than the agreement between the United States, Mexico and Canada and the European Union. [17] The combined GDP of potential RCEP members exceeded the combined GDP of Trans-Pacific Partnership (TPP) members in 2007. It has been suggested that continued economic growth, particularly in China and Indonesia, could push the total GDP of initial RCEP members to over $100 trillion by 2050, about twice the project size of TPP economies. [18] On 23.
In January 2017, President Donald Trump signed a memorandum withdrawing the United States from the TPP, a move that improved RCEP`s chances of success. [19] There is a common misconception that this trade agreement is a Chinese-led initiative. RCEP was indeed born at the ASEAN negotiating table after being first presented at the 19th ASEAN Summit in 2011, with negotiations starting the following year. But China has played a central role in advancing RCEP after eight years of signing talks last month. The Myanmar Transport Infrastructure Monitor notes that Myanmar would remain in force if excluded from RCEP. The agreement requires at least six ASEAN member states and three non-ASEAN partners to have ratified the agreement for it to enter into force. Existing free trade agreements and long-standing non-trade barriers could limit the impact of RCEP on Myanmar, but the country could benefit from increased investment due to improved access to global value chains. RCEP is the first free trade agreement between China, Japan and South Korea, three of Asia`s four largest economies. [9] At the time of signing, analysts predicted that this would help stimulate the economy amid the COVID-19 pandemic, «bring the economic center of gravity back to Asia,» and amplify the U.S. economic and political decline. [7] [10] [11] Myanmar State Counsellor Daw Aung San Suu Kyi, who attended the virtual signing ceremony, said: «The historic trade pact will send a strong signal to the world that we are determined to maintain the credibility of the regional cooperation architecture, maintain business confidence and contribute to regional economic recovery.» A long-delayed agreement, the Regional Comprehensive Economic Partnership (RCEP), was signed on Sunday by China, Japan, South Korea, Australia, New Zealand and the 10-member Association of Southeast Asian Nations (ASEAN).