외교안보연구소 발간자료

RCEP CPTPP and Indo-Pacific Economic Framework - Is It Possible to Prevent Fragmentation and Blocization of the Regional Order? -

RCEP CPTPP and Indo-Pacific Economic Framework - Is It Possible to Prevent Fragmentation and Blocization of the Regional Order? -

RCEP CPTPP and Indo-Pacific Economic Framework - Is It Possible to Prevent Fragmentation and Blocization of the Regional Order? -

중국

일본

대한민국

I.  Geoeconomic Opportunities and Geopolitical Risks of the RCEP
Ⅱ.  ‘Indo-Pacific Economic Framework\’ a New Economic Cooperation Model
Ⅲ.  The Way forward for Regional Integration: Tasks Ahead


I.  Geoeconomic Opportunities and Geopolitical Risks of the RCEP
 
On January 1\ 2022\ the Regional Comprehensive Economic Partnership Agreement (RCEP) took effect in six ASEAN countries—Brunei\ Cambodia\ Laos\ Singapore\ Thailand\ and Vietnam—and four non-ASEAN countries—Australia\ China\ Japan\ and New Zealand.
 
RCEP is the world's largest mega Free Trade Agreement (FTA)\ covering a region that accounts for roughly 30% of global GDP\ population\ and trade\ respectively\ as of 2020. However\ the most notable feature of the RCEP is the geoeconomic opportunities stemming from the substantial growth potential of the region (Kim Yanghee\ 2021). RCEP is the institutional integration of regional value chains (RVCs) composed of neighboring countries in a region that is driving the global economy. Moreover\ the core members of RCEP-RVC are China\ Japan\ and Korea\ advanced manufacturing powers and the world's 2nd\ 3rd\ and 10th largest economies\ in that order.
 
The RCEP’s unified Rules of Origin (RoO) is considered the greatest accomplishment. Considering the fact that\ compared to the EU or the US\ RCEP-GVC has a higher proportion of complex GVC (crossing the border at least twice for production) than simple GVC (crossing the border once)\ the unified RoO will promote the expansion of trade and investment\ the reconfiguration of existing interregional production networks\ and subsequently help improve efficiency and productivity in the region. However\ RCEP-RVC also has a geoeconomic risk\ namely excessive dependence on China. As of 2018\ China was the largest importer of twelve RCEP members and the top exporter of eight. However\ RCEP-RVC is closely linked with GVC. In fact\ China’s largest export market is the US.
 
RCEP ended up with a mid-level liberalization due to geopolitical risks such as development disparities and strategic competition among major members (Kim Yanghee\ 2021).The implementation timeline also varies considering less developed members. The signatories will concess tariffs by an average of 91.5% over 20 years (based on tariff line)\ but 83% of these are already covered by existing FTAs. For China\ Japan\ and South Korea\ this is close to current concession levels. Korea’s average concession level stands at 88%\ which is slightly higher than the Korea-ASEAN FTA\ but not much different from the Korea-China FTA\ and is lower than that of the Korea-Australia and Korea-New Zealand FTAs. Those between Korea and Japan\ the first FTA under RCEP\ are 83.0%.
 
However\ in the case of agricultural goods\ Korea's concessions to Japan and Japan's to Korea account for only 46.2% and 54.1%\ respectively. The level of liberalization for services\ investment\ e-commerce\ and other trade rules in RCEP is higher than in ASEAN+1 FTAs but lower than in the CPTPP. Furthermore\ RCEP does not include provisions on labor\ the environment\ and state-owned-enterprises as included in CPTPP.
 
RCEP’s uniqueness\ unprecedented in the history of economic integration\ lies in the geopolitical risks of economic integration between strategic competitors; deep-rooted mutual mistrust harbored by neighboring countries resulting from multifarious conflicts\ disputes\ and power transitions. In addition to Sino-Japanese relations\ escalating tensions between China and Australia\ triggered by Australian Prime Minister Morrison’s call for an investigation into the origins of the coronavirus\ seem ominous. The Sino-Indian conflict\ which escalated into a border dispute\ is one of the reasons why India withdrew from RCEP. Korea-Japan relations are equally strained\ although the two are not strategic competitors. In addition\ RCEP\ which took effect in the largest arena of strategic competition between the U.S. and China\ is fraught with inherent instability that causes a collision between the centripetal force of China and the centrifugal force of the U.S. As a result\ China desperately needed this first mega FTA to reinforce its centripetal force while the US’s centripetal force is somewhat weakened after former president Trump’s withdrawal from the TPP. According to Park\ Petri\ and Plummer (2021)\ the RCEP’s positive impact (0.46%) is in part likely to offset the negative impact (-1.85%) that Sino-US strategic competition will have on China's GDP in 2030.
 
Japan was tepid about signing the RCEP due to concerns over China's expansion of regional presence. Japan instead led to introducing the exception clause for India’s prompt return after its exit from RCEP to leverage against China’s rise. Then\ what is the background of Japan's becoming the third signatory among the 15 countries? Recent studies on the effects of RCEP generally draw similar conclusion that RCEP’s benefits are concentrated on South Korea\ China\ and Japan. What’s worth noting here is that South Korea and China levy high tariffs\ and this is the first time Japan has signed an FTA with these high-tariff countries. Satoru Kumagai and Kazunobu Hayakawa (2021) estimate that the additional GDP growth of each member attributed to the RCEP in 2030 will be in the order of Japan\ Korea\ and China. Park\ Petri\ and Plummer (2021) also projected that the overall GDP gain from RCEP would be 0.6% in 2030\ but Korea and Japan would enjoy the highest increase. Banga\ Gallagher\ and Sharma (2021) also drew similar conclusions. Despite the conflict with China\ Australia decided to join the growth engine of the globe and depart from isolation. Japan and Australia seem to regard RCEP as a critical vehicle to check China’s increasing economic assertiveness based on binding international rules.


* Attached the File

IFANS PERSPECTIVES

아시아

역내포괄적경제동반자(RCEP) 협상

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김양희 경제통상개발연구부장

김양희

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2022-03

KOR