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With the arrival of a new US administration and the central role of China in the bloc, the EU needs to outline an Asian commercial strategy that reconciles the importance of China and the transatlantic relationship. However, with China playing a central role in the new arrangement, the long-term strategic and geopolitical implications are major. Europeans tend to look inwards and when they look outwards tend to look mainly west, riveted, for example, by the recent US elections.

But, increasingly, most economic activity, most economic growth and some of the more significant geopolitical shifts are occurring in the east. Eruopean from the standpoint of European firms, RCEP is best understood as a free trade agreement between three manufacturing powerhouses — China, Japan and the Republic of Korea— and their joint outreach towards a vast periphery in Asia.

Harmonisation of rules of origin across the many preceding trade agreements among the 15 signatories of RCEP is a crucial aspect of the new arrangement. Common and simplified https://amazonia.fiocruz.br/scdp/blog/purpose-of-case-study-in-psychology/the-cause-and-effect-of-the-teen.php of origin are designed to facilitate the integration of regional value chains. As my colleague Alicia Garcia Herrero has arguedthough China and Japan will play a central role as the biggest manufacturing centres by far, Europea large population and low wage nations in South East Asia will likely see an enhanced role in global value chains.

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The direct economic effects of RCEP on the European economy Ecinomies likely to be small — though they are certainly not negligible — and will be felt only gradually. Agriculture is only modestly affected by the deal and the tariff reductions in manufacturing are subject to many exceptionswith detailed country schedules that carve out sensitive sectors.

Moreover, the implementation period is unusually long for an agreement of this kind, extending to 20 years. There are no provisions for environmental and labour standards, which are always demanded in negotiations involving the EU and US.

The agreement is subject to a ratification process, which — if experience is a guide — will turn out to be arduous and drawn out in several instances, especially given the diffidence of many of the RCEP https://amazonia.fiocruz.br/scdp/blog/purdue-owl-research-paper/structural-violence-and-its-effects-on-the.php to China. It must be noted, however, that ASEAN members, which were the originators of the RCEP idea about a decade ago, have a long history of gradually extending and deepening their trade agreement in an evolutionary process, and RCEP may prove to be a dynamic process, not only a one-time deal. The greatest worry for the EU is displacement of its exports to RCEP members due to the preference margins accorded to the other signatories, known in economic jargon as trade diversion.

The table below shows that the EU has important trade agreements in force in Japan, South Korea and Vietnam, indicating that exports to those countries are unlikely to be displaced.

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Analysts have tried to evaluate the net impact of these various effects using sophisticated models, but their conclusions are based on many assumptions and must be taken with a grain of salt. The conclusion of the most widely cited study Petri and Plummer,for example, indicates that the EU could be a small net gainer from RCEP, about 0. While detailed calculations are not reported, it is likely that the net gain is due mainly to lower prices of imports from RCEP, which more than offset the effect of trade diversion.

One should bear in mind that this is an aggregate effect, and that individual firms may see significant The Impact Of European Economies On The if they are displaced in important markets such as China, and that this may well happen.]