RCEP sends powerful signal of Asia's commitment to open trade: IMF official

RCEP sends powerful signal of Asia's commitment to open trade: IMF official

The Regional Comprehensive Economic Partnership (RCEP) sends a very powerful signal of the region's commitment to open and liberal trade, an International Monetary Fund (IMF) official said Tuesday, calling it a "very welcome step."

"The global environment has been extremely challenging, and yet Asia was able to conclude this agreement in this challenging environment, sending a very powerful signal," Jonathan D. Ostry, acting director of the IMF's Asia and Pacific Department, said in response to a question from Xinhua during a virtual news conference.

Noting that trade has been a powerful driver of growth and poverty alleviation in Asia for decades, Ostry said even as there were global trade tensions, Asia sought to invigorate regional trade liberalization.

RCEP, signed in November 2020, groups the 10 members of the Association of Southeast Asian Nations (ASEAN) as well as China, Japan, South Korea, Australia and New Zealand.

RCEP brings together many countries, including three regional giants -- China, Japan, and South Korea -- for the first time in a common regional agreement, Ostry said.

The IMF official said the newly-signed agreement could provide a powerful impetus for greater trade in the Asia and Pacific region.

"There is more to do, especially in areas for example of e-commerce, services, investment, and of course we all hope that future agreements can address those issues," he said.

Ostry also noted that there are estimates out there of relatively small static gains accruing as a result of RCEP, but frequently these studies "underestimate the total gains" because the larger gains are "dynamic" and "occur over time," as investment decisions are affected.

According to the IMF's newly released projections, Asia-Pacific is expected to grow by 7.6 percent this year and by 5.4 percent next year, with multi-dimensional divergence in recovery -- across countries, and within countries across sectors, age groups, gender and skill level.

Aside from reducing trade restrictions and easing trade and technology tensions, the IMF official suggested that corporate debt vulnerabilities, especially among small and medium-sized enterprises, need to be addressed by pivoting from pandemic liquidity support to solvency support.

Moreover, he noted that further efforts are needed to advance the green agenda and push forward the promising shift toward a greener energy mix emerging amid the pandemic, adding that increased investment in green technologies coupled with higher carbon prices are essential to reducing emissions.

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