Japan’s parliament approved the world’s largest free trade deal, the Regional Comprehensive Economic Partnership (RCEP), signed by 15 Asia-Pacific countries including China and the 10-member Association of Southeast Asian Nations (ASEAN), on Wednesday as signatories focus on it and raising the opportunities for the pact to go into power to happen from the beginning of next year.
The deal was approved by the country’s parliament, locally known as Diet. Yet, the deal is required to go into power before the current year’s over. The approval by Japan’s upper house comes after the lower house gave the green light recently and a day after China called for the deal to be sanctioned to support the economy in the Asia-Pacific.
The agreement, signed by the 15 nations last November, will become effective 60 days after it is sanctioned by six of the ASEAN members and three of different countries. As of Wednesday, Singapore and China have finished systems for confirmation.
When completely effective, the Regional Comprehensive Economic Partnership will make a free trade zone covering around 30% of the world’s gross domestic product (GDP), trade, and population, to become the world’s largest trade deal signed ever in modern history. It will be Japan’s first trade deal including both China and South Korea – its biggest and third greatest trade partners.
It is required to abolish tariffs on 91% of goods among the member states while it permits “common rules on investment and intellectual property to promote free trade.” By disposing of tariffs on 91% of products, the RCEP will make a free-trade zone covering almost 33% of the world’s economy, trade, and population.
Up to this point, China, Thailand, and Singapore had completely approved the deal.
Japan, for the first time, is associated with a single trade deal where both China and South Korea are partners, with the former its biggest and the latter its third-biggest trade partner.
It will likewise be the first deal of its sort including China, Japan, and South Korea, and comes as the three nations battle to negotiate a trilateral free-trade agreement.
Japan is the second-biggest regional economy outside ASEAN to give its formal help to the deal. China confirmed the agreement in March when the Ministry of Commerce said all members of the RCEP were planning to approve the deal before the year’s over for authorization from 2022.
Tokyo sees the deal will help support the world’s third-biggest economy, develop Japan’s GDP by 2.7%, and make 570,000 jobs.
Not long after six of the ASEAN members and three external members sanction the RCEP, it will become effective within 60 days. Thailand and Singapore have likewise sanctioned the agreement. The deal will go into force 60 days after six of the ASEAN members and three non-ASEAN member states sanction it.
At a meeting of the United Nations Economic and Social Commission for Asia and Pacific on Tuesday, China’s vice-minister of foreign affairs Ma Zhaoxu called for efforts to adhere to regional economic integration and protect the multilateral trade system.
“China took the lead in the ratification of the RCEP and is ready to push forward with all sides for the early entry into force and implementation,” he said.
Ma Zhaoxu additionally underlined China’s interest in joining the Japan-led Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which is more open and demands higher standards for trade, investment, competition, and labor protection than the RCEP.
“We are willing to actively consider joining the CPTPP to inject a new push for the economic integration of the Asia-Pacific region,” he said.
Wang Huiyao, director of the Beijing-based Center for China and Globalization, said the approval by Japan’s parliament sent a signal to the region, particularly to ASEAN, on its help for economic integration despite progressively complex geopolitical conditions.
“China will welcome the news. It’s a sign of support for regional economic integration. And the Japanese business community is still looking for a chance to cooperate with China, even though we don’t have a free-trade deal with Japan or a trilateral one with South Korea and Japan,” Wang said.
China is intending to produce “high-standard” free-trade agreements with more partners in the next five years as well as closer participation along the industrial chain in the region, including in South Korea and Japan.
Wang Shouwen, China’s vice-minister of commerce, said in March that upon the authorization of the RCEP, China would endeavor to accelerate chats on the trilateral free-trade agreement.
Liu Jiangyong, an international relations professor at Tsinghua University, said implementation of the RCEP would facilitate the path for China’s agricultural exports to Japan and diminish trade barriers to economic integration.
He likewise said the approval was a matter of technique and much would rely upon progress in the trilateral deal talks.
“Political tensions are expected to be a big restraint on forging the trilateral free-trade deal,” he said.
RCEP groups the 10 Association of Southeast Asian Nations (ASEAN) members — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam — plus Japan, China, South Korea, Australia, and New Zealand.
India was one of the founding RCEP members however avoided all deals from November 2019 because of worry that its trade deficit with China would develop.