Korea-Asean forum is bullish on RCEP

Diplomacy

Published: 20 Apr. 2022, 18:21 Updated: 21 Apr. 2022, 10:33

Korea-Asean forum is bullish on RCEP

Kim Hae-yong, secretary general of the ASEAN-Korea Centre, fourth from right; Pg Hjh Nooriyah Plw Pg Hj Yussof, Brunei ambassador to Korea, third from right; Kim Heung-chong, president of Korea Institute for International Economic Policy, fourth from left; Cheong Chul-gun, CEO of the Korea JoongAng Daily, third from left; and representatives of businesses and investors in Asean and Korea and members of the ASEAN Secretariat participate in the ASEAN-Korea Trade and Investment Roundtable 2022 at the Shilla Seoul on Wednesday. [PARK SANG-MOON]

The Regional Comprehensive Economic Partnership (RCEP), the largest free trade agreement to date, is a step in the right direction to create a single market between Northeast and Southeast Asia, said speakers at a forum hosted by the ASEAN-Korea Centre in Seoul on Wednesday.

“The de-facto FTA among China, Japan and Korea created by RCEP not only catalyzed economic integration in Northeast Asia, but also created the momentum for Southeast Asian and Northeast Asian integration,” said Anna Robeniol, advisor to the secretary-general of Asean and deputy secretary-general for the Asean Economic Community at the ASEAN Secretariat, speaking virtually at the forum, "and this bodes well for supply chains and production networks in the entire East Asian region."

Korea, Asean's 10 member states, Japan, China, Australia and New Zealand signed the free trade agreement that went into effect for some of these countries from Jan. 1. The RCEP went into effect for Korea on Feb. 1.

The RCEP comes on top of the Korea-ASEAN FTA and other free trade agreements between Asean and Northeast Asian countries, and is expected to reduce tariffs on about 92 percent of goods traded among the countries.

But the mega-FTA is the first to include all the major Northeast Asian players, namely, China, Japan and Korea. The three have been negotiating the trilateral FTA since 2013.

“This creates an expectation that a so-called single market, especially in intermediary goods, in the Asia Pacific region is possible through the RCEP,” said Kim Han-sung, professor of economics at Ajou University, speaking at the forum. “The RCEP is a step in the right direction to realize this goal.”

The agreement may be even more relevant because of ongoing rivalry between the United States and China in the region, said some experts.

“Some people expected the U.S.-China rivalry to weaken with the inauguration of the Joe Biden administration, but we all see now that that has not been the case,” said Cho Seong-dae, director on international trade at the Korea International Trade Association. “That, coupled with the Russian invasion of Ukraine, have posed serious risks for businesses worldwide.

“As we enter a new age where FTAs are arranged around new values and rules, such as those on climate change and digitalization, we are entering an age of new challenges and opportunities in the trade area,” he added. “How well we utilize the RCEP from here will determine whether we are able to use the agreement to boost trade and investment among participating states.”

The RCEP adds a number of key agreements that are expected to boost trade and investment ties between Korea and Asean, especially for small companies, said Oh Soo-hyun, an associate research fellow of the trade agreement team of the Korea Institute for International Economic Policy (KIEP), in an address at the forum.

“The RCEP has independent chapters on e-commerce, competition, government procurement, technical barriers to trade and so on, which comes in addition to the existing chapters in the Asean-Korea FTA,” Oh said. “A key change to pay attention to in the RCEP is the eased strictness and complexity of the rules of origin.”

According to studies by the KIEP, only 54.1 percent of Korean businesses exporting to ASEAN utilized the Korea-Asean FTA in 2020.

“The biggest woe of the SMEs was that the rules of origin section of the Korea-Asean FTA was too complicated,” Oh said. “The RCEP has simplified and streamlined the rules of origin.”

The forum also highlighted hopes from some experts and companies on how the mega-FTA may help all RCEP participating nations recover from the Covid-19 pandemic.

“As our economies begin to gradually open up and recover from the plight of the Covid-19 pandemic, it is ever more important that we strengthen our economic commitment towards regional integration and open, inclusive, and rules-based multilateral trading system,” said Brunei Ambassador to Korea Pg Hjh Nooriyah Plw Pg Hj Yussof, who also chairs the Asean Committee in Seoul. “In this regard it is timely that the RCEP agreement has entered into force.”

Despite the pandemic, trade between Korea and the Asean region has remained strong, even exceeding pre-Covid levels.

Korea-Asean trade grew from $151.3 billion in 2019 to $176.5 billion in 2021, according to KIEP.

All Asean member states except Myanmar experienced an average of 3 percent GDP growth last year, according to the ASEAN-Korea Centre.

The forum, “ASEAN-Korea Trade and Investment Roundtable 2022,” held at the Shilla Seoul and livestreamed on the center’s YouTube channel, was joined by experts and businesses in Korea and the Asean region.

It was the second following an inaugural forum on trade and investment ties between Korea and ASEAN hosted by the center last year. The forum this year was hosted by the ASEAN-Korea Centre and supported by KIEP and the ASEAN Secretariat.

“Starting with the ‘ASEAN-Korea Trade and Investment Roundtable 2022,’ the ASEAN-Korea Centre plans to connect people and share prosperity between Korea and the Asean region in 2022,” Kim Hae-yong, secretary general of the ASEAN-Korea Centre, told the Korea JoongAng Daily, adding that more than 30 projects are planned for the year. “The ASEAN-Korea Centre aims to successfully implement these programs under the circumstances of the recovery from pandemic.”

Included in the upcoming projects is the official launch of the Jeju ASEAN Hall in September.

“Visitors from both Korea and Asean will be able to enjoy the harmonious display of culture and tourism resources from all 10 Asean countries as well as Korea in this permanent exhibition,” said Kim. “The Hall is surely expected to offer cultural diversities in two-way exchanges.”

The center will run a follow-up program to analyze the results from a survey last year on the perception of Asean and Korean young people of each other.

BY ESTHER CHUNG [chung.juhee@joongang.co.kr]