Nov.9 – China is set to commence negotiations to create a 16-nation trade bloc,
known as the Regional Comprehensive Economic Partnership (RCEP), with its
launch expected to be formally announced at the ASEAN summit in Phnom Penh
later this month.
The RCEP will include the 10
members of the Association of Southeast Asian Nations (ASEAN) plus China,
India, Japan, South Korea, Australia and New Zealand, and will have the effect
of lowering trade barriers and custom duties across the region by the end of
2015. ASEAN includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar,
Philippines, Singapore, Thailand and Vietnam. A map of the participating
members of the proposed RCEP can be seen below.
The RCEP framework was endorsed
by leaders at last November’s ASEAN summit, and ASEAN has sent invitations to
the six nations, a grouping favored by Japan. South Korean Trade Minister Bark
Tae-ho has said that China at first only wanted to have ASEAN plus three other
nations (China, Japan and South Korea) included in the pact, but a counter
proposal from America for a Trans-Pacific Partnership (TPP) pushed it to enter
into talks for a wider-ranging accord. The TPP specifically excludes China.
With the dawning of the RCEP,
Asia is poised to enter into a new era of mutual trade and growth dynamics.
ASEAN already has individual free trade agreements in place with each of the
participating countries.
“The trade dynamics across Asia
are changing fast, and the global supply chain will shift as a result,” says
Chris Devonshire-Ellis, principal of Dezan Shira & Associates. “For foreign
investors in China, the impact will mean a continuing assessment of the
financial costs of manufacturing within the region, and a shift away from
China-based manufacturing in time to lower-cost Asian destinations. We have
already seen the emergence of Vietnam as a manufacturing hub to service Chinese
consumers, and this will continue. On the other hand, we will see increasing
amounts of Chinese investment into Asia.”
“The effect will be to reposition
the financial heart of Asia towards Singapore, and for businesses to branch out
from there to other RCEP investments as per the needs of each business,”
Devonshire-Ellis adds.
In related ASEAN business news, Myanmar
President Thein Sein signed off on Myanmar’s new Foreign Investment Law last
Friday after months of debate between the country’s executive and legislative
branches of government. The law is significant as it outlines new regulations,
measures and directions the country will take as concerns its foreign investment
policy. An unofficial English translation of the new Foreign Investment Law,
kindly translated by the Eleven Media Group, can be downloaded here.
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