Statement to the Joint Standing Committee on Treaties’ Inquiry into RCEP, 10 May 2021
By James Baxter, First Assistant Secretary, Office of Trade Negotiations, Department of Foreign Affairs and Trade
10 May 2021
Thank you, Chair, for the opportunity to make an opening statement on the Regional Comprehensive Economic Partnership Agreement, or RCEP, as it is known.
The signing of RCEP in November 2020 by Australia and 14 other countries was a significant achievement. It signalled a shared commitment to opening up new trade and investment opportunities and also support for rules-based trading arrangements – and these were especially important signals in the face of the challenges of COVID-19 and global trade tensions. RCEP will help stimulate growth, strengthen economic integration, and build business confidence in our region.
Once in force for all signatories, RCEP will be the world’s largest free trade agreement. RCEP signatories account for almost one-third of the world’s population and GDP. No other free trade agreement brings together the collective economic weight of the ASEAN nations and the major economies in North Asia. RCEP also provides for additional economies to join the Agreement in the future – building the significance of the Agreement over time.
Ratification of RCEP by the government would deliver significant benefits for Australia. RCEP brings together in a single economic framework nine of Australia’s top 15 trading partners that together account for nearly 60 per cent of our trade and about two-thirds of our exports.
Chair, much of the National Impact Assessment is devoted to an explanation of the commercial and regulatory implications of the RCEP Agreement for Australia. But I would like to highlight briefly for the Committee’s consideration the government’s view of the strategic dimension of RCEP.
The RCEP Agreement’s negotiation was driven by the ten ASEAN nations, which collectively constitute Australia’s second-largest two-way trading partner. In the lead-up to the launch of negotiations, ASEAN governments had deliberated for some years about the best way for them to strengthen economic links with regional economies. They had looked closely at two options. The first was for them to negotiate an FTA with the three North Asian economies – China, Japan and Korea – that would have built on the economic cooperation that had ASEAN had developed with that group during the Asian financial crisis.
The second option was a more inclusive approach that would extend to all of ASEAN’s then FTA partners – including Australia, India and New Zealand.
Now in the event, ASEAN opted for the latter approach, leading to the RCEP we have before us today.
I point this out because, in considering Australia’s participation in RCEP, it cannot be taken for granted that Australia will always and as of right have the opportunity to participate in the development of regional economic arrangements. That’s an important factor to bear in mind at a time when others in the region represent economic structures and models of governance that are not aligned with Australian interests, and when the US has not been actively engaged in regional economic rule-making.
Australian participation in RCEP negotiations has allowed us to influence the rules incorporated in the Agreement. The government is currently preparing to work with ASEAN and like-minded signatories to shape the implementation and future direction of the RCEP Agreement so that it contributes to the development of open, transparent approaches to regional trade and investment; and bolsters ASEAN’s role in the region.
Active Australian participation in RCEP will be needed to maximise our influence, and that will require a substantial investment on the part of the government; but recent developments in Australia’s trade with some regional partners point to the risk of not making that investment.
RCEP signatory states are aiming for entry into force of the Agreement on 1 January 2022. All 15 signatories have begun their domestic treaty‑making procedures, with Singapore and China already having ratified the Agreement.
Thank you again for the opportunity to make these opening remarks. We’d welcome your questions.