During the ASEAN summit earlier this year in Bangkok, the Thai government, as the ASEAN chair, pushed RCEP members to agree to conclude RCEP talks by the end of this year.
RCEP is a proposed free trade agreement between the 10 ASEAN members and the six Asia-Pacific countries with which ASEAN has free trade agreements, namely Australia, China, India, Japan, South Korea and New Zealand.
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Once agreed, RCEP will create a massive economic bloc representing 32.3% of the world’s gross domestic product (GDP). The combined population of RCEP member countries totals 3.589 billion or 48% of the global population and the combined trade within the bloc has reached USD11.4 trillion or 31% of global trade.
For Thailand, the RCEP agreement may not significantly change Thailand’s trade structure because Thailand already has trade agreements with ASEAN and the other six countries, which helped double Thai exports to these countries from 2010 to USD148.5 billion last year.
More than half of Thailand’s exports went to RCEP countries. They included car and parts, chemicals and plastics, refined petroleum, electronics and parts. At present, foreign direct investment (FDI) from the RCEP members in Thailand accounted for over 70% of total FDI.
Moreover, as the RCEP market is set to expand with a growing middle class, Thailand will have a better chance to capitalize on the thriving market in the region.
However, the talks have progressed slowly. The dialogue partners have completed negotiations on only seven of the 20 RCEP chapters.
Members are still unable to reach agreement on contentious issues like rules of origin and details of how members will open their markets to goods, services and investment under the RCEP framework.
In particular, India has demanded strict criteria to determine the rules of origin, fearing an influx of Chinese goods after the RCEP agreement. India already suffers a trade deficit with China to the tune of USD53 billion. The Indian business sector is not convinced that RCEP will create a win-win situation.
RCEP regained significance after the Trade-Pacific Partnership trade talks, another free trade project in the Pacific, lost steam after the US withdrew.
