reply UN UNCTAD Report: RCEP will give rise to a new focus in global trade

The Regional Comprehensive Economic Partnership (RCEP), which will take effect on January 1, 2022, will create the world's largest economic and trade zone, according to a study released by the United Nations Conference on Trade and Development (UNCTAD).'RCEP would be the largest trade agreement in the world measured by the gross domestic product of member countries,' the report said. In contrast, major regional trade agreements such as merCOSUR, the African Continental Free Trade Area, the European Union and the US-Mexico-Canada agreement also increased as a share of global GDP.According to the analysis of the report, RCEP will have a huge impact on international trade, and the emerging bloc's economic size and trade vitality will make it a new center of gravity for global trade. The entry into force of RCEP has also helped to enhance trade resilience in the context of COVID-19.According to the report, tariff concessions are a central principle of RCEP, and its members will liberalize trade by gradually reducing tariffs. Many tariffs would be abolished immediately, while others would be phased out over 20 years. The tariffs still in force will be largely confined to specific products in strategic sectors, such as agriculture and the automotive industry. Trade between RCEP members reached about $2.3 trillion in 2019. The tariff concessions of the agreement will have trade creation and trade diversion effects. The lower tariffs will stimulate nearly $17 billion of trade between member countries and shift nearly $25 billion of trade from non-member to member countries, while further boosting nearly 2% of exports between RCEP members, worth about $42 billion.According to the report, RCEP members are expected to benefit from the agreement to varying degrees. Tariff concessions are expected to have a higher trade impact on the group's largest economies. Japan will benefit the most from the RCEP tariff reduction due to the trade diversion effect, with its exports expected to increase by about $20 billion. The agreement will also have a material positive impact on exports from Australia, China, South Korea and New Zealand. Tariff concessions on RCEP could eventually reduce exports from Cambodia, Indonesia, the Philippines and Vietnam due to negative trade diversion effects, with some of these economies' exports expected to shift in favor of other RCEP members. Overall, the region covered by the agreement as a whole will benefit from RCEP's tariff preferences.The report highlights that trade diversion effects may be amplified as RCEP member countries further integrate, a factor that should not be underestimated by non-RCEP members.