World's Largest Free Trade Agreement Signed

After 8 years of 46 negotiations and 19 ministerial meetings, an agreement was reached between ASEAN members Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam and the union's dialogue partners Australia, China, Japan, South Korea and New Zealand. it happened. When looked at, it is seen that RCEP covers a population of 2.1 billion, and from this point of view, it includes 30 percent of the global gross domestic product.

Negotiations between ASEAN member countries and China, Japan, South Korea, Australia, New Zealand and India for RCEP, the world's largest free trade agreement, started in 2012. The agreement, which was expected to be concluded within 2 years at the beginning, was postponed continuously due to different commercial expectations and thoughts of the countries in the region, and was finally concluded this year. India, which was seen as a major agreement party in this process, withdrew from the RCEP negotiations at the ASEAN Plus Three summit in 2019, stating that it was concerned about the cheap prices of Chinese products entering India.

Looking at the global comments on the agreement, it is seen that the RCEP agreement will increase China's economic dominance in the Asia-Pacific region. In addition, it is noted that for the first time, China, Japan and South Korea are parties to a free trade agreement at the same time. When we look at the countries that are party to the agreement, it is striking that most of them are extremely large and economically dominant countries. The fact that these countries come together under such an agreement makes the agreement the largest trade agreement in the world. It is foreseen that the agreement will bring many changes in terms of supply chain flows, distribution of production factors and financial balances throughout the world in the coming years. In addition, according to the comments, it is another estimation that the US and European companies will be left out of the free trade zone and placed at a disadvantage.

When we look at it, the fact that all of these countries, which already have trade agreements with each other, gathered in a single free trade area can be considered one of the biggest results of RCEP. In addition, even if the agreement has been signed, there are still very important steps expected to be taken in the future and regulations that will take years. For example, this agreement needs to be ratified in the parliaments of the 15 countries that are party to this process. As a result, 15 Asia-Pacific countries will gradually reduce the customs duties applied between them in the coming years with this agreement; Logistics will be facilitated with the new common trade rules to be determined. It is known that the agreement covers areas such as trade, e-commerce, service areas, investments, telecommunications and copyrights. When the scope area is examined, it is also striking that agricultural products that apply different standards globally are not included in this agreement.

At this point, processes will emerge where our country and other world countries will think about where they will be in this agreement and how they will benefit from the agreement in the following processes. Considering that we already have a lot of commercial activities with the partner countries, it seems that we will be faced with a process where we will develop innovative solutions in order to increase our exports. For example, when these countries to which we also export become more affordable than the countries that are party to the agreement, this situation may have a negative impact on our exports. On the positive side, a more comprehensive supply chain network will be developed with the new agreement in investments to these countries; It will be possible to benefit from new developments in the flow of production factors. The consequences of the agreement will be seen more effectively in the coming years.