We're Members of the Biggest Trading Bloc
It turns out that we (the ASEAN) are already members of the largest economic bloc. On November 15, 2020, the RCEP (Regional Comprehensive Economic Partnership) was signed by each of the ASEAN leaders, plus China, Japan, South Korea, Australia and New Zealand. This is the largest trading bloc ever. 30% of total world population, 30% of Global GDP. Because of the pandemic, the signing was done online in each country.
With this RCEP, the 15 countries agree to eliminate or reduce import tariffs among goods from each member.
We've been in the AFTA (ASEAN Free Trade Area) for quite a long time. Before AFTA applied effectively, there were fears among each ASEAN country that their products would be less competitive than the others. Apparently, the fear did not come true. The economy is getting better.
But now the challenges of RECP are much greater than AFTA. The Participants of AFTA are among fellow ASEAN members, with abilities that do not differ much. With the entry of China - with its enormous production capacity and low prices - will everything remain the same?
|RCEP Summit 2019 at Bangkok, Thailand.|
Photo: ANTARA FOTO/Akbar Nugroho Gumay
India opted out of the RCEP block, worried that RCEP would become to China-centric. There was fear that India's market will be flooded with imported goods (especially from China). In addition, they were also worried that their dairy products could not compete with products from Australia and New Zealand.
Given this risk (an influx of goods from China), why did ASEAN keep signing the RCEP? What are the benefits?
One of the most important benefits is: Economic recovery after the pandemic. It must be noted that now economies around the world are in bad times because of the pandemic. The existence of RCEP is a hope to foster the economic recovery of each country.