While the Regional Comprehensive Economic Partnership (RCEP) may attract little media coverage outside the Far East, this trade arrangement could be a game changer. The partnership has been in the offing for some time, although it was only officially launched in January 2022. So who is part of the RCEP, and what are the long-term benefits?


Original RCEP membership


While plans are afoot for Hong Kong to join the RCEP, the group currently has 15 members, which include:-


• China
• Japan
• South Korea
• Australia
• New Zealand


There are also ten member states from the Association of Southeast Asian Nations, which take in:-


• Singapore
• Malaysia
• Philippines
• Thailand
• Vietnam
• Brunei
• Cambodia
• Indonesia
• Laos
• Myanmar


This is the world’s largest free trade bloc, placing similar organisations such as BRICS and the EU in the shadows. While India withdrew its original application in 2019, there are hopes that the country will soon reapply for membership.


Benefits of RCEP membership


While there are currently a set number of issues covered byRCEP, it is vital to remember this is a very fluid organisation. The RCEP association addresses topics such as:-


• Trade in goods
• Trade in services
• Investment
• Economic cooperation
• Technical cooperation
• Electronic commerce
• Intellectual property
• Government procurement
• Competition
• Small and medium-sized enterprises


The philosophy behind RCEP is to encourage tariff-free trade amongst all members, thereby lowering consumer/business costs and maximising returns. To put this into perspective, by the end of 2022, around 25% of Chinese goods imported from Japan and 55% of Japanese goods imported from China will be tariff-free.


Integrating supply chains


While much focus tends to be on tariffs, it is essential to recognise that connecting various supply chains across the APAC region will significantly improve business efficiency. Members of the RCEP currently account for around 30% of global trade volume. This will likely be extended as and when Hong Kong and India join. Individually, members will benefit hugely from membership of this association, while collectively, the group will undoubtedly have more influence on the international stage.


Are Hong Kong and India the final pieces of the jigsaw?


Aided by the Chinese authorities, Hong Kong has become an international trade centre and an investment magnet. Currently, circa 70% of Hong Kong's total merchandise trade is within the RCEP membership. Consequently, significant cost savings will be available for Hong Kong companies looking to trade across the APAC region. 


We know that the Hong Kong authorities applied for membership back in February, and the application is being actively considered. While there may still be some issues to resolve in the background, experts believe that confirmation of membership is pretty close.


India was heavily involved in the early negotiations surrounding the creation of RCEP. While the reasons are unclear, the Indian authorities withdrew their membership application in 2019. However, the country is predicted to have the fifth-largest economy by the end of 2022, the third-largest by 2050 and the second-largest by 2075. Consequently, it is inconceivable that the country will not, at some point, be an influential member of the RCEP?




While the EU and BRICS trade associations tend to grab the headlines, over the coming years, the power and influence of the RCEP trade association will become more evident. The current arrangement will be strengthened when Hong Kong finally joins, and many expect the powerhouse, which is India, to follow suit fairly soon after. It may have taken some time to put the RCEP together, but it is certainly hitting the ground running!

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