World’s mammoth RCEP to benefit Singapore, regional nations
The Regional Comprehensive Economic Partnership (RCEP), the world’s largest trade pact, will reduce tariffs and harmonise trade rules, and Singapore and regional nations stand to gain from it by being more deeply plugged into global supply chains.
Singapore stands to gain from RCEP by being more deeply plugged into global supply chains. (Photo: straitstimes.com)
Singapore (VNA) – The Regional Comprehensive Economic Partnership(RCEP), the world’s largest trade pact, will reduce tariffs and harmonise traderules, and Singapore and regional nations stand to gain from it by being moredeeply plugged into global supply chains.
According to the Monetary Authority of Singapore (MAS)’s biannual macroeconomicreview released on April 28, RCEP is expected to increase regional trade flowsand deepen cross-border linkages among its 15 member economies.
Like other trade agreements that Singapore signed with China and the Republicof Korea, RCEP helps Singapore become more integrated into the supply chainscentred on these countries.
In the same vein, the pact will boost the region’s competitiveness as alocation for supply chains, the review noted.
Overall benefits from RCEP fall into two categories.
The first is tariff reductions. These average a small decline of 0.7 percent bythe 10th year, and one percent by the 20th year after theagreement comes into force.
Tariff cuts differ significantly across products and economies, with a moregradual pace of reduction in Cambodia, Laos and Vietnam, to allow more time forthe economies to adapt to increased competition.
Output in sectors such as textiles and garments, leather, wood and paper willgrow faster during the first 10 years of the agreement, while sectors likeagriculture, energy and mining, chemicals and electronics will expand at a fasterpace in the longer term.
Individualcountries in the trade bloc are expected to see a small boost in their GDP ofbetween 0.4 percent and 0.6 percent.
The secondcategory of gains comes from harmonisation of rules of origin, which govern howlocally produced content is assessed in order for products to be eligible forpreferential import tariff rates.
With common rules of origin (CRO) under RCEP, companies can more optimallysource raw materials and intermediate inputs from member countries, while benefitingfrom lower tariff rates.
It observed that although the region already has a large number of tradeagreements, RCEP brings together key upstream high-tech manufacturers such asJapan and the Republic of Korea, mid-stream producers including Thailand andthe Philippines, and countries with relatively low labour costs such asCambodia, Laos and Myanmar, providing more opportunities for firms to enhancesupply and trade linkages./.
Singapore ratified the Regional Comprehensive Economic Partnership (RCEP) and deposited its ratification instrument on April 9, becoming the first participating country to complete the ratification process for the deal.
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Singapore stands to gain from RCEP by being more deeply plugged into global supply chains. (Photo: straitstimes.com) 
