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RCEP signifies the shift of global economic and trade center, experts say

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Reference:CGTN | Updated:20 April 2021

The signing of the highly anticipated Regional Comprehensive Economic Partnership (RCEP) in November 2020 has injected strong momentum into Asian and global economic growth, and called for more efforts for RCEP members to work together to counter anti-globalization sentiment in a post COVID-19 era.

COVID-19 is likely to exacerbate the anti-globalization sentiment that ran high in recent years, given the severe impact on business and production, disruption on supply chains, as well as the uneven distribution of vaccines.

Many countries raised doubts about the future of globalization as COVID-19 severely disrupted the global industrial and supply chains which are the very foundation of globalization, Long Yongtu, former Chinese vice minister for commerce, said during a session on RCEP at the 2021 Boao Forum for Asia.

"The signing of the RCEP agreement by the 15 countries during this difficult time conveyed important information for hopes of globalization. The trend of economic globalization is unstoppable," Long said.

"The global trade and economic center for the past one or two hundred years were in Europe and North America. RCEP agreement symbolizes the center of global economy has shifted to the Asia-Pacific region, as the signing of a free trade agreement must be in a region where global trade and economic activities are the most active and trade liberalization is the most developed," Long said.

To counter anti-globalization sentiment, RCEP members should fulfill the commitment of the agreement, actively promote the adjustment of some content of the agreement based on the innovation practices of enterprises and the effectiveness of the agreement, including the negative list and the dispute settlement mechanism, Zhou Mi, senior research fellow, deputy director of the Institute of American and Oceanian Study of Chinese Academy of International Trade and Economic Cooperation, Ministry of Commerce, told CGTN in an interview.

They should also help reduce the uncertainties in the global economy, and play an active role in safeguarding the existing multilateral system that some countries questioned and intended to destroy, Zhou said.

Long said political and ideological interference should be minimized in the field of international trade and investment. Because it will be difficult to set objective rules and standards if too much political interference involved.

Challenges remain for RCEP members

There is no doubt that huge opportunities exist in the largest free trade bloc in the Asia-Pacific region as it helps integrate regional industrial, supply and value chains, facilitate the free flow of economic factors, as well as move up Asia's position in global value chain.

For China, it means the building of a global high-standard free trade network, and signifies China's free trade zone strategy has entered a new stage, Shen Yi, an associate professor of the Department of International Politics at Fudan University, told CGTN.

But at the same time, the early enforcement of the agreement is urgent as the recovery of the global economy is still facing risks. And how members can honor their commitments and make adjustments in the level of openness and on tariff reduction policy is also a question to be considered, Zhou said.

Another big challenge is the alignment and mutual recognition of regulations, systems and standards. Countries should actively take part in the process and frequently conduct negotiations, Zhou added.

For Chinese enterprises, they should actively participate in the process and work with government and related departments to promote the enforcement of the agreement, Zhou added.

Isabelle Durant, secretary-general of the United Nations Conference on Trade and Development, said at the forum that development gaps among RCEP countries should be reduced as diversification is a two-edged sword.

It is a challenge to transfer things from high-cost areas to low-cost areas. And small and medium enterprises faces direct challenges. There must be competition laws in different countries, so that some negative effects of diversification can be avoided, Durant said.

The transfer of labor intensive industry may happen in the future as some countries among the 15 members are less developed ASEAN countries, Shen cautioned.

China should secure its already existed high value-added upstream industry chain or create some new upstream industry chains. Some regions in the country with labor cost advantages can actively align with places in need of industry transfer to boost local economy and tap new areas of regional development, Shen said.


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