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Australian Prime Minister Scott Morrison, Japanese Prime Minister Shinzo Abe, South Korean President Moon Jae-in, and Bruneian Sultan Hassanal Bolkiah pose for a photograph in Bangkok, Thailand, on Nov. 4. (Blue House photo pool)

With agreements to sign from the 10 ASEAN (Association of Southeast Asian Nations) members, as well as those of South Korea, China, Japan, Australia, and New Zealand — all of the 16 original participants excluding India — the Regional Comprehensive Economic Partnership (RCEP) is set to be a massive trade agreement, encompassing half of the world’s population.

“The leaders of RCEP member states released a joint statement announcing that 15 countries, all but India, had agreed to the 20-chapter treaty in its entirety,” South Korea’s Ministry of Trade, Industry, and Energy said on Nov. 4.

That brings to a close seven years of negotiations, which began in May 2013, on the world’s largest free trade agreement (FTA), which will span 3.6 billion people (48% of the global population), a cumulative GDP (gross domestic product) of US$27.4 trillion (32% of global GDP), and trade worth US$9.6 trillion (29% of global GDP).

“Countries from regions with various levels of economic development, from the lowest level to the most advanced, are taking part in the RCEP. Because many of these countries have a young population with rich growth potential, the agreement will provide South Korean companies with an opportunity for gaining access to promising markets that are undergoing rapid growth,” the South Korean government announced.

The RCEP is also expected to enable South Korean President Moon Jae-in to launch the New Southern Policy that he has championed since taking office.

The new agreement will also serve to supplement the South Korea-ASEAN FTA, which was somewhat light on content. The RCEP includes new provisions that reflect changes in the trade environment, including the expansion of the Fourth Industrial Revolution. More specifically, it incorporates e-commerce and intellectual property (IP) rights, two areas omitted from the South Korea-ASEAN FTA. Since ASEAN member states such as Thailand and Vietnam are major consumers of the Korean Wave, known as Hallyu, the adoption of intellectual property (IP) rights is likely to help stabilize the expansion of Hallyu media content.

The RCEP’s significance as a multilateral agreement is even greater, trade experts say, because it doesn’t include a mechanism for investor-state disputes (ISD), which has bolstered unilateral action by the US and other powerful countries. Japan reportedly failed in an effort to have ISD mechanism included in the agreement.

“The exclusion of ISD from this agreement is an opportunity to establish multilateralism, rather than the unilateralism of powerful states, as the basic framework for trade,” said Song Gi-ho, an attorney and trade expert.

“Rather than just focusing narrowly on how the agreement will help conglomerates boost their exports, the government needs to take the initiative in helping this agreement become established as a new platform for international trade that buffers against and counterbalances US-led trends in international trade.”

“We need to protect the free trade order from being undermined and to reorient the global economy from the path of ‘balance through reduction’ to the path of ‘balance through expansion.’ I hope that ASEAN, South Korea, China, and Japan will be able to play a central role in this cooperation. The RCEP will also contribute to peace and mutual prosperity in East Asia,” Moon said during the ASEAN Plus Three summit, held prior to the RCEP declaration.

The finalization of this FTA could also reduce the economic influence of the US in the Asia-Pacific. Immediately after taking office, US President Donald Trump withdrew from the Trans-Pacific Partnership (TPP) in East Asia. An intensifying trade row with the US last year spurred China to accelerate the RCEP talks.

After carrying out a legal review of the agreement and wrapping up negotiations about opening remaining markets, the participating countries are expected to officially sign the RCEP in 2020. South Korea’s Trade Ministry also said that that member states would be working to convince India to rejoin. After the negotiations ran into difficulties, India ultimately declined to sign the agreement.

By Kim Eun-hyoung, staff reporter

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