BY U THAUNG TUN
Last Sunday, I had the distinct privilege of representing Myanmar as our nation took yet another bold step forward in signing the Regional Comprehensive Economic Partnership (RCEP). In doing so, 15 partner nations – the 10 ASEAN member states together with Australia, China, Japan, New Zealand, and South Korea – joined forces in forming the largest free trade agreement the world has ever seen.
"Clearly, the signing of the RCEP represents a milestone moment for Myanmar."
Eight years in the making, the RCEP represents an important milestone for Myanmar and the region. It is regarded as the most important trade agreement since the creation of the World Trade Organisation in 1994.
Representing a consumer market of 2.2 billion people, with a combined GDP of US$ 26.2 trillion – one-third of global economic output – over the coming decade this new mega-trade bloc is expected to add as much as US$ 200 billion to the global economy and an additional 0.2 per cent to the GDP of member economies.
WHAT IS THE RCEP?
With the RCEP, we have taken a range of existing Free Trade Agreements (FTA), some in place for more than a decade, including the ASEAN Free Trade Area to which Myanmar has been a party since the early years, and integrated these into a single, far-reaching economic pact. In doing so, our region has come together as a more unified economic zone under a single, coherent trading regime.
This new, mutually beneficial economic partnership includes a range of commitments, from expanding market access to enhancing economic and technical cooperation, to the progressive lowering of tariffs, together with provisions on the trade in goods and services, intellectual property, e-commerce, telecoms, and SMEs.
HOW MIGHT MYANMAR BENEFIT?
For Myanmar, this landmark agreement will strengthen our country’s commercial and trade ties, including granting us greater access to the dynamic regional markets of Japan and South Korea, while increasing flows of quality, responsible foreign investment.
Often referred to as ASEAN’s last frontier market, Myanmar is well-placed. I believe our participation in this new Partnership is entirely fitting given our enviable geographic position – linking East and West – providing a strategic land bridge connecting two of the world’s largest economies, those of India and China, with the dynamic and economically vibrant markets of East and South-East Asia.
Our participation in the RCEP is also entirely in keeping with our longer-term strategic development priorities outlined within our Myanmar Sustainable Development Plan, including a commitment to ensuring Myanmar’s private sector can take full advantage of new market conditions and opportunities.
Importantly, the RCEP has been drafted with sufficient flexibility to accommodate the varied and at times divergent interests of partner countries at various stages of development – from Australia to Myanmar, from Singapore to Vietnam.
Some have expressed hesitation as to whether Myanmar can truly benefit from such a trade pact. However, just as the strategic significance of this Agreement cannot be overstated, nor can its benefit to Myanmar and Myanmar business be minimized.
But we should not expect radical changes overnight. It will take several years for much of the RCEP to come into full effect following its ratification by the Hluttaw.
In addition, our negotiation team led by the Director-General of the Foreign Economic Relations Department has secured special and differential treatment for Myanmar commensurate with our country’s Least Developed Country (LDC) status. For example, while members have committed to removing tariffs on 65 per cent of trade in goods, when the Agreement enters into force, Myanmar need only remove tariffs on 30 per cent, placing Myanmar business in a strong and competitive position.
Furthermore, in areas such as intellectual property, competition policy and e-commerce, we have secured transition periods ranging from between 3 and 10 years during which time we can ensure we are fully ready to implement all provisions, including by building human and institutional capacities in both the public and private sector, and by incorporating relevant international standards.
Through our participation in the RCEP, our businesses will also gain greater market access for a growing range of unique and in-demand Myanmar exports. Unified rules of origin regulations, including covering goods requiring labour-intensive attention to detail such as garment finishing, are expected to encourage greater foreign investment into our country’s expanding manufacturing sector.
The Agreement also complements our efforts to facilitate more efficient border trade via streamlined, consistently applied customs procedures.
Importantly, the RCEP also opens the door to a range of opportunities to forge closer ties with our development partner community.
WHAT OF INDIA?
Some have asked why India has held off on joining the Agreement for now. Whereas ASEAN members have already agreed to a raft of FTAs, including with China, India has yet to do so. As such, India has opted to delay participation in the RCEP until those negotiations have been concluded. The the Joint Leaders' Statement adopted at the 4th RCEP Summit last Sunday leaves the door open to India if it wishes to join at some future date.
RCEP AND COVID-19 RECOVERY
I believe that signing the RCEP this month, despite the current pandemic, demonstrates our strong, shared and continuing commitment to accelerating our region’s economic recovery while creating further opportunities for inclusive, equitable and sustainable development.
As we turn our heads toward a post-COVID-19 future, now is not the time for cynicism. Instead, we must come together to revitalise our nations and rebuild our region’s economy. While free trade was not a cause of this pandemic, it must represent a vital part of our economic recovery.
I do believe that Myanmar’s signing of the RCEP sends a clear signal to the world that we remain committed to maintaining the credibility of our region’s economic cooperation architecture while retaining the trust of our nation’s private sector.
I also believe the RCEP should be viewed as a political achievement – a much-needed victory for all those who still hold to the promise of a stable, well-functioning multilateral trading system and accompanying institutions.
Indeed, our State Counsellor has described the RCEP as providing a new driving force that will accelerate the facilitation of trade and investment as part of a well-functioning, highly efficient, rules-based multilateral trading system.
Myanmar’s participation in the RCEP demonstrates our commitment to such a system.
In sum, the RCEP is good for Myanmar and good for our region. I firmly believe this partnership represents the future of trade in the Asia-Pacific region and am proud that Myanmar is now a part of it.
U Thaung Tun is Myanmar’s Union Minister of Investment and Foreign Economic Relations