SINGAPORE: After what has been a challenging year, the signing of the Regional Comprehensive Economic Partnership (RCEP) agreement "will be the bright spot that points the direction ahead", said Trade and Industry Minister Chan Chun Sing on Sunday (Nov 15).
"The signing of the RCEP agreement is a timely boost to the longer-term prospects of the region. It will be the bright spot that points the direction ahead," Mr Chan told the media after the signing.
“At a time where support for multilateralism is fraying, the RCEP will send a clear statement of the region’s unwavering support and commitment to the multilateral trading system,” he said.
Mr Chan noted that 2020 has been a challenging year, "with the global disruptions to production and supply chains as a result of the COVID-19 pandemic".
"The after-effects will linger for years to come and it will take time for all of us to rebuild our economies and recover from the crisis."
"Even so, no economy can recover on its own. As domestic pressure grows, it is understandable to want to onshore production and bring supply chains closer to home. However, this is not the most sustainable strategy.
"At times like these, we need to continue to work together to recover from the crisis and chart a new path for the future," said Mr Chan.
Prime Minister Lee Hsien Loong in his intervention at the RCEP Summit called the signing of the agreement “a major step forward”.
“But now the hard work of implementing the agreement and encouraging our businesses to take full advantage of it begins.
“We have all made difficult trade-offs to advance the negotiations. And we will have to work hard to persuade our citizens that the RCEP will benefit them,” said Mr Lee.
“But I have no doubt that the RCEP is a plus for all of us, and will help stem the tide against globalisation.”
READ: PM Lee says Singapore to contribute US$100,000 to COVID-19 ASEAN fund, hails RCEP signing as 'major achievement'
CONSOLIDATION OF TRADE RULES, INCREASED MARKET ACCESS
The RCEP consolidates smaller existing agreements to form the world’s largest free-trade agreement, covering a third of the world both in terms of GDP and population.
It comprises “a diverse group of countries in Asia”, said Mr Chan, from the developed economies of Japan, South Korea, Australia and New Zealand to the middle income economies in ASEAN, as well as China, the world’s second biggest economy.
“And our determination to carry this through in this challenging year shows an awareness that our prosperity and success are interlinked,” he added.
For Singapore, the RCEP will broaden preferential market access for goods, notably into China, Japan and South Korea, said Mr Chan.
“In some of these markets, additional preferential market access reaches 22 per cent”, benefiting businesses especially in the chemicals and plastics, as well as processed foods sectors, he added.
Singapore exporters will also benefit from lower transaction time and costs, as well as “greater certainty” due to simplified customs procedures and enhanced trade facilitation measures.
In some RCEP markets, at least 65 per cent of the services sectors will be open to foreign participation and with increased foreign shareholding limits. At least 50 sub-sectors will be open for 51 per cent foreign equity across sectors such as telecommunications, financial services, computer-related services, professional services, and distribution and logistic services.
“Enhanced investment rules and disciplines” will also improve transparency and provide investors with guarantees against prohibited performance requirements by governments, said Mr Chan.
RCEP will also help businesses “take advantage of regional value chains” by consolidating the various existing rules into a single rulebook, he added.
Emerging trade fields including e-commerce, competition policy and intellectual property (IP) rights are also pursued under the RCEP.
"WORK REMAINS TO BE DONE"
To reap the benefits of the RCEP, “work remains to be done”, said Mr Chan, adding that signatories would need to “accelerate efforts to ratify the agreement as soon as possible”.
The RCEP will come into force when six ASEAN countries and three non-ASEAN countries have ratified it.
Mr Chan said Singapore will ratify the RCEP "definitely" within the next 12 months. And while there is no "firm timeline" for the other countries, "we expect this to be done soonest because I think all the countries involved have given the commitment to expedite their domestic processes", he said.
Mr Chan said the early implementation of RCEP will potentially provide further opportunities to Singapore’s trade with the 14 other signatories, which totalled 50.4 per cent (S$515 billion) of the island’s global trade in 2019.
“For Singapore, the RCEP provides a strong foundation for us to rebuild our economy and overcome the challenges as we emerge from the pandemic together,” said Mr Chan.
“I look forward to seeing our businesses tap on the benefits from the RCEP to support their post-pandemic recovery efforts.”
Meanwhile, consumers will have "more competitive options to consider when they purchase their products (as) some of the savings from the tariffs will ultimately be translated into savings for the consumers as well", he added.