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RCEP Agreement: New opportunities, new challenges

November 17, 2020 | 10:12

After eight years of negotiations, the Regional Comprehensive Economic Partnership (RCEP) Agreement have been signed by 10 ASEAN member countries and five partners – Japan, New Zealand, Australia, China and the Republic of Korea (RoK).

37th asean summit and related summits successfully wrap up 37th ASEAN Summit and Related Summits successfully wrap up
worlds largest free trade agreement covering 22 billion people signed by 15 countries World’s largest free trade agreement, covering 2.2 billion people signed by 15 countries
japanese scholar appreciated vietnams role in rcep talks Japanese scholar appreciated Vietnam's role in RCEP talks
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Prime Minister Nguyen Xuan Phuc (L) and Minister of Industry and Trade Tran Tuan Anh at the RCEP signing ceremony in Hanoi on November 15, 2020. Photo: VnExpress

After eight years of negotiations, the Regional Comprehensive Economic Partnership (RCEP) Agreement have been signed by 10 ASEAN member countries and five partners – Japan, New Zealand, Australia, China and the Republic of Korea (RoK).

With diverse goods that can meet the requirements of almost RCEP countries, Vietnam is expected to benefit much from the trade deal.

The world’s biggest free-trade area

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The RCEP creates the world’s biggest free-trade area with a combined population of 2.2 billion and accumulative GDP of 26.2 trillion USD or 30 percent of the world’s total GDP. Photo: Nikkei

According to Minister of Industry and Trade Tran Tuan Anh, in the context of the COVID-19 pandemic disrupting the global supply chain, and emerging global protectionism, the signing of the agreement has become a milestone in economic integration of the countries.

The pact is opening up a new period of cooperation and connectivity for the 15 economies as it has created the world’s biggest free-trade area with a combined population of 2.2 billion and accumulative GDP of 26.2 trillion USD or 30 percent of the world’s total GDP.

Notably, the agreement establishes stable, long-term export markets for ASEAN countries, including Vietnam. Legal frameworks regarding trade, investment, intellectual property and e-commerce have also been formed in the region under the deal.

Along with other free trade agreements, the RCEP will help to step up Vietnam’s reforms,” the minister said. “There will be more momentum for socio-economic development, and competitiveness of businesses, particularly small-and medium-sized enterprises, will be improved.”

Economist Nguyen Minh Phong said thanks to the deal, Vietnam and other ASEAN countries will access the most cutting-edge supply chains in East Asia, thus promoting investment, production and business.

Economic recovery in the countries will also be sped up, he said, adding that market opening, the harmonization of rules of product origin, and trade facilitation will make it easier for businesses to set up partnerships to create sustainable supply and consumption markets.

Luu Hai Minh, Chairman of the Nhat Hai New Technology Joint Stock Company, said he expects that his company will expand the export market to many RCEP countries thanks to decreased tariffs and simplified customs procedures.

Optimising opportunities

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Market opening, the harmonization of rules of product origin, and trade facilitation will make it easier for businesses to set up partnerships to create sustainable supply and consumption markets. Photo: VNA

Like other free trade agreements Vietnam has signed, the RCEP creates new frameworks with an array of advantages, along with standards compulsory to all businesses.

Nguyen Thi Thu Trang, Director of the WTO and International Trade Centre under the Vietnam Chamber of Commerce and Industry, suggested enterprises improve their competitiveness in order to optimise the opportunities generated by the agreement.

In the domestic market, once the RCEP Agreement is put into place, Vietnamese goods have to compete with imports from other RCEP countries, especially the neighbouring country of China.

Phong said if Vietnamese firms fail to overcome technical barriers, they may loose right in the home market and find it hard to penetrate into other RCEP countries.

He, therefore, said the domestic businesses should work harder to improve their competitiveness and product quality, and carry forward strength of Vietnamese products to expand the market.

Economists share the view on the need to raise the awareness of businesses about the agreement while waiting for the next legal procedures of the deal./.

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