HSBC: China-led RCEP in focus as TPP fades

November 15, 2016, http://www.thestar.com.my/business/business-news/2016/11/15/hsbc-says-china-led-rcep-in-focus-as-tpp-fades/

KUALA LUMPUR: The China-led Regional Comprehensive Economic Partnership (RCEP) should help boost trade volumes across Asia, especially Asean, although it has its limitations compared with the stalled Trans-Pacific Partnership (TPP), said HSBC Bank Malaysia Bhd.

“The deal will be particularly advantageous for Asean as it will reduce the incongruity across pre-existing free trade agreements (FTAs) and thereby strengthen the appeal of the region as a production base.

“Moreover, by connecting the world’s three largest consumer markets – China, India and Asean, the RCEP offers a new ‘south-south’ template for growth that can partly offset subdued imports and investment in the West,” said its chief executive officer Mukhtar Hussain in a statement on Tuesday.

He said RCEP was important for Asean as it effectively allowed the convergence between the FTAs and should help attract foreign companies to base their production in Asean.

In addition to Asean’s outward FTAs, the region has plans for internal integration, namely through the Asean Economic Community.

It was estimated that the agreement would boost baseline gross domestic product (GDP) by 5% through 2030, thanks to a break-down in investment barriers and services liberalisation, particularly across financial services, he said.

“Upon full implementation, this new partnership could provide dynamic stimuli to revitalise trade and investment in Asia,” he added.

The RCEP includes Asean-10, in addition to China, India, Japan, Korea, Australia, and New Zealand.

As the first pan-Asia free trade deal, it boasts a list of impressive statistics such as covering roughly half of the world’s population and nearly 30% of global GDP.

Meanwhile, the TPP involving 12 countries, namely the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile, and Peru, accounts for 40% of the global GDP. – Bernama