The world’s largest free-trade bloc, which was recently formed between 15 Asia-Pacific economies, including China, is expected to boost post-pandemic global trade and cement Turkey’s role in the region by opening new export markets to the country, a business official said.
Turkish Foreign Economic Relations Board (DEIK) Asia-Pacific Business Councils Chairperson Murat Kolbaşı said in a report published by Turkish daily Dünya Tuesday that the Regional Comprehensive Partnership Agreement (RCEP) that was signed on Nov. 15 will lay the groundwork for new export markets for the country.
He said that it is a long-term advantage that Turkey already has free trade agreements (FTA) with three of the countries that inked Sunday’s deal.
Turkey has FTAs with Malaysia and Singapore, both of which are members of the Association of Southeast Asian Nations (ASEAN), along with South Korea.
Kolbaşı emphasized that Turkish firms should focus on the region and take their fair share of foreign sales.
Stressing that the agreement is also important in terms of global trade, Kolbaşı said that almost half of the world's trade, which reached $19 trillion in value last year, comes from China and the U.S. alone. He noted, however, that with the RCEP, the region’s share in global trade is expected to grow.
The DEIK official said Turkey’s trade with the European Union – which receives 52% share of the country’s total exports today – experienced a boost following the Customs Union agreement that entered into force in 1996 and that the RCEP can provide a similar boost.
"I think that if we can develop our foreign trade with the 15 countries that signed the RCEP and increase the presence of Turkish brands there, this could be a good export gate for us and export growth could later come," Kolbaşı said.
Turkey is primarily a buyer when it comes to trade with the Asia-Pacific region, he said.
The country had a foreign trade deficit of $35 billion last year and $40 billion in 2018 with 17 countries and two regions in the DEIK Asia-Pacific region. Thus, Kolbaşı said, the region was already among Turkey’s targets to fill the trade gap.
Kolbaşı said that cultural tourism exports to the RCEP countries can also play a pivotal role.
He pointed out that Turkey's tourism efforts are generally focused on its beautiful beaches, sea and sun, however, when considering the Asian markets, cultural tourism comes first.
"The local facilities that remain closed during the winter months can be put into operation with tourists from the region," he added.
50% of global GDP by 2030
RCEP includes China, Japan, South Korea, Australia, New Zealand and the 10 members of ASEAN, namely, Brunei, Vietnam, Laos, Cambodia, Thailand, Myanmar, Malaysia, Singapore, Indonesia and the Philippines.
India was involved in early discussions but opted out last year over concerns related to cheap Chinese imports.
Member states have said there is still room for India to join RCEP. Countries are allowed to join RCEP within 18 months after it comes into force, but India, as one of the original negotiating partners, can join at any time once the deal comes into effect.
As the world’s biggest trade deal, RCEP covers a population of 2.2 billion and a combined gross domestic product (GDP) of $26.2 trillion, according to the International Monetary Fund (IMF).
With the agreement, HSBC predicts that more than 50% of the global GDP will come from 15 RCEP countries by 2030. According to Bloomberg Intelligence, the agreement will allow China's GDP to grow by 0.5%, South Korea’s by 1.4% and Japan’s by 1.3% by 2030.
Notably, RCEP marks the first time China, Japan and South Korea have been brought together under a single trade agreement – a process that has been otherwise marred by historical and diplomatic disputes.
Last year, at the height of a trade dispute between Japan and South Korea, which had its roots in a dispute stemming from Japan's wartime colonization of the Korean peninsula, South Korean officials said Japanese trade restrictions violated the "spirit" of the RCEP.
"Japan may find significant benefits (with RCEP), as it now has preferential access to South Korea and China, which it did not have," Deborah Elms of the Singapore-based Asian Trade Centre told Reuters.
RCEP provides some flexibility for less-developed members to implement the practical and legislative changes it requires. Cambodia and Laos, for example, have three to five years to upgrade customs procedures.
An added benefit for countries that already have FTAs with each other is that RCEP creates a common set of rules of origin, which will facilitate easier movement of goods between the 15 members.
Energy trade, particularly of natural gas and liquefied natural gas (LNG), will also be among the main pillars of the agreement, taking into account the key LNG players, namely China, Australia and Japan.
According to the International Energy Agency (IEA), Asia is projected to see an increase in demand for energy supplies, while a decrease is expected for Europe. The agency expects an increase of 446 million tons of oil equivalent (MTOE) for Southeast Asia and 807 MTOE for China by 2040, while a 256 MTOE decrease is expected for Europe.