RCEP Trade Agreement: Why Asia-Focused Strategies Are the Next Big Thing
Trade deals boost economies because of the benefits that members receive. If you’ve never heard of RCEP trade agreement, now it’s time to know more about its implications because analysts say it will change the trajectory of trades in Asia. This is one of the biggest deals ever signed in November 2020, and interestingly this is also the second major deal in Asia that doesn’t involve the United States.
What is the RCEP Trade Agreement?
RCEP is known as the Regional Comprehensive Economic Partnership, a trade agreement established and signed by 15 countries in Asia and the Pacific region, including China, Cambodia, Laos, Brunei, Vietnam, Indonesia, Thailand, Singapore, South Korea, Japan, Australia, New Zealand, the Philippines, and Malaysia.
By default, India is also involved in the free-trade agreement among ASEAN countries, but after negotiations for many years, it pulled back. However, it can still participate and come back if it wants to in the future. The RCEP deal was signed over the weekend during a virtual summit. That being said, this deal is seen as an extension of China’s influence in the region as this is the first time the country made a regional multilateral trade pact.
What are the benefits of being part of this deal?
First, the leaders of these nations hope that this deal will help speed up the recovery of economies as the pandemic disrupted activities for months. The members of the pact comprise 30% of the world’s population, which will account for 29% of the world’s GDP according to BBC. Moreover, the pact is bigger than the US-Mexico-Canada Agreement and European Union.
While the effects of this deal will not be visible quickly, the RCEP aims to get rid of a range of tariffs on imports within 20 years. There are also provisions on telecommunications, financial services, e-commerce, intellectual property, and professional services. For example, under this pact, members of the RCEP will be treated equally, thus giving an advantage for companies based in these RCEP countries as they enjoy the incentives as they scout for suppliers within the regions.
How should global brands respond to Asia-Pacific markets?
Now is the perfect time to have Asia-focused strategies especially those companies that are based in the United States, Europe, and the UK because this pact is expected to spur more collaboration among the trading members. As China is also being put in the spotlight as the leader in the global supply chain, RCEP will remove the barriers and potential restrictions on sourcing products in China since the pact puts the country in the same category as the other members.
That being said, this is the perfect opportunity as well to expand to these RCEP regions and take advantage of the incentives in the trade agreement.
What is the role of translation and localization in this deal?
As the shift to Asian markets is imminent, LIMPID also understands that brands will need more assistance in growing their businesses in these regions. Translation and localization unlock opportunities in internet services and professional services beyond the borders and bridge the gaps in communication and culture. That said, LIMPID will also launch its own services for Asian languages to cater to the needs of brands in different sectors.