Asia forms world’s biggest trade bloc

Vietnam's Prime Minister Nguyen Xuan Phuc and Minister of Industry and Trade Tran Tuan Anh, right, attend the signing ceremony for the Regional Comprehensive Economic Partnership trade pact at the ASEAN summit in Hanoi on Sunday. (AFP)
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Updated 15 November 2020

Asia forms world’s biggest trade bloc

  • The regional partnership represents almost a third of global GDP

KUALA LUMPUR: After eight years of intense negotiations, China and 14 other countries agreed to establish the world’s largest trade bloc on the last day of the Association of Southeast Asian Nations’ (ASEAN) virtual summit in Hanoi, Vietnam.

Dubbed the world’s biggest free-trade agreement, the Regional Comprehensive Economic Partnership (RCEP) will represent $24.8 billion or almost a third of the global gross domestic product based on the World Bank’s 2018 data.

“Undoubtedly, it represents a significant and imperative milestone in the integration and revitalization of economies of the 15 parties,” Malaysia’s Trade and Industry Minister Azmin Ali said in a statement.

This RCEP will allow the 15 members to “enhance their regional value chains, boost regional trades and investments as well as provide an avenue for information sharing,” he said.

Analysts hope the deal will hasten recovery from the shocks of the pandemic in Asia.

“The conclusion of RCEP negotiation, the largest free-trade agreement in the world, will send a strong message that affirms ASEAN’s leading role in supporting the multilateral trading system, creating a new trading structure in the region, enabling sustainable trade facilitation, revitalizing the supply chains disrupted by COVID-19 and assisting the post-pandemic recovery,” said Vietnam’s Prime Minister Nguyen Xuan Phuc.

The accord will take already low tariffs on trade between member countries still lower, over time, and is less comprehensive than an 11-nation trans-Pacific trade deal that President Donald Trump pulled out of shortly after taking office.

The tariff elimination is an increase from the current 8 percent between both Japan and China without a bilateral free-trade deal.

Malaysian Prime Minister Muhyiddin Yassin said that the free-trade deal would “act as the main vehicle to enhance regional economic integration” within ASEAN and its partners.

“(Due to) challenges brought by the coronavirus pandemic, coupled with the global trading systems due to regional tension, it was imperative for ASEAN to continue to sustain its competitiveness in the region,” he said in a statement on Sunday after signing the agreement.

HIGHLIGHTS

The accord will take already low tariffs on trade between member countries still lower.

It leaves the door open for India to rejoin the bloc.

Apart from the 10 ASEAN members, it includes China, Japan, South Korea, Australia, and New Zealand, but not the US.

“I believe that this is the touchstone for future growth and vibrancy of our regional economic collaboration,” he added.

Apart from the 10 ASEAN members, it includes China, Japan, South Korea, Australia, and New Zealand, but not the US. Officials said the accord leaves the door open for India, which dropped out due to fierce domestic opposition to its market-opening requirements, to rejoin the bloc.

 It will take time to fully assess the exact details of the agreement encompassing tariff schedules and rules for all 15 countries involved — the tariffs schedule just for Japan is 1,334 pages long.

 It is not expected to go as far as the EU in integrating member economies but does build on existing free trade arrangements.

“Lower tariffs coupled with a massive market share will be a huge advantage for RCEP members to be part of a crucial supply chain, especially post-pandemic,” said Azmi Hassan, a professor of Geostrategy at the Malaysia Technology University.

He told Arab News the RCEP is also expected to provide a “huge avenue” to China to mold the Asia Pacific region “according to its view.”

“The region is considered a catalyst to the world geopolitics and with China in the driver seat via RCEP, not only economic issues come into play, but also geopolitics and this puts China in the lead compared to the US,” Azmi added.

He said opportunities for China were “vast” as it would be able to “shape the future global economic structures” by promoting pro multilateralism and anti-protectionism.

Others believe that the RCEP is more “inclusive” and does not “elicit protectionist tendencies” from non-member countries, especially the US.

“The agreement is an affirmation of the importance of lowering trade barriers. This means prospering each other through a mutually beneficial exchange of goods and services,” Prof. Yeah Kim Leng, a senior fellow of Sunway University and director of the Economic Studies Program, told Arab News.

Yeah said the regional pact would boost growth and economic efficiency through increased trade and investment flows.

“While the gains may not be equally distributed among the member countries, the net overall economic output and efficiency gains from the closer regional cooperation will be positive in the long run.”


Egypt expects economic growth between 2.8 and 4% in 2021

Updated 47 min 21 sec ago

Egypt expects economic growth between 2.8 and 4% in 2021

  • Unemployment indicators also reflected the economy's development

CAIRO: Egyptian Finance Minister Mohamed Maait said the country was reaching positive growth rates, calling it a great achievement in light of the global conditions brought on by the coronavirus pandemic.

Maait said the estimated rate of economic growth in the fiscal year 2021-2022 would reach between 2.8 and 4 percent.

He said the percentage varied according to how each person perceived it sectorally, and that industries such as tourism and aviation were significantly affected by the spread of the disease.

“We have a priority to make room for the private sector’s participation in development projects,” the minister added.

He explained that there would be strengthened cooperation with the Transport Ministry in implementing its projects in partnership with the private sector.

Egypt had been hoping for growth between 6 and 6.5 percent before the coronavirus crisis broke out.

The country topped the emerging market economies in containing the rate of inflation during the current year, according to data from the Egyptian cabinet, despite the global repercussions of the health emergency.

The International Monetary Fund (IMF) said that Egypt achieved the largest annual decline in the inflation rate in emerging markets in 2020, compared to 2019, with a decline of 8.2 percentage points.

Among the effects of the economic reform plan were inflation rates falling to 5.7 percent during 2019-2020, compared to 13.9 percent in 2018-2019.

Unemployment indicators also reflected the economy's development. 

Recent data from the Egyptian Central Agency for Public Mobilization and Statistics showed the unemployment rate declining to 7.3 percent in the third quarter of this year, compared to 7.8 percent a year ago.

Egypt's monetary reserves rose to $39.22 billion by the end of last October, according to the country's central bank.

The IMF said the performance of the Egyptian economy exceeded expectations.