Japan approves world’s biggest free trade agreement involving China, ASEAN

Japan has become the third member to ratify the agreement, which was signed by 15 countries in November 2020. Among the signatories, China and Singapore have completed the ratification procedures.

Created On: Jun 25, 2021 17:38 IST
Japan ratifies RCEP
Japan ratifies RCEP

Japan on June 25, 2021, ratified the Regional Comprehensive Economic Partnership (RCEP) which is a free trade agreement between Australia, China, and the Association of Southeast Asian Nations (ASEAN).

Japan has become the third member to ratify the agreement, which was signed by 15 countries in November 2020. Among the signatories, China and Singapore have completed the ratification procedures.

Japanese Government deposited its ratification instrument with the ASEAN secretariat. The Cabinet approved the accord on June 25, completing the country’s domestic procedures for ratification.

Joining RCEP will be Japan’s first trade deal involving China and South Korea- its largest and third-biggest trade partners.

Japan ratifies RCEP: Significance

The Economy and Trade Minister of Japan, Hiroshi Kajiyama while talking about the agreement at a press conference said that the deal will further strengthen the link between Japan and the (Asia-Pacific) region, which is the growth center of the world. It will also contribute to Japan’s economic growth when it comes into force.

Earlier in 2021, the Japanese Government had estimated that the trade treaty can lift the gross domestic product of the world’s third-largest economy by about 2.7 percent.

About the Regional Comprehensive Economic Partnership (RCEP):

The agreement, signed by 15 countries in November 2020, will enter into effect 60 days after it is ratified by at least 6 ASEAN members and three non-ASEAN signatory countries.

The RCEP consists of the 10 ASEAN states- Cambodia, Brunei, Laos, Indonesia, Malaysia, the Philippines, Myanmar, Thailand, Singapore, and Vietnam- as well as China, Australia, Japan, South Korea, and New Zealand.

The deal is described as the largest regional trading agreement to this day. It is a proposed free trade agreement between ASEAN nations and its FTA partners.

The agreement intends at reducing tariffs and red tape and includes the unified rules of origin throughout the bloc, which might facilitate the international supply chains and trade within the region.

India’s decision of not joining RCEP:

The Regional Comprehensive Economic Partnership was originally being negotiated between 16 countries including India. However, in November 2020, India decided not to join the agreement as its key concerns were not addressed.

Some of the key reasons behind the country’s decision of staying out of the world’s biggest trade agreement include-

Inadequate protection against the import surge

Insufficient differential with China

Possible circumvention of the rules of origin

Keeping the base year as 2014

Non-availability of credible assurances on market access and non-tariff barriers

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