The Japanese government has said that its economy could be boosted by 2.7% as a result of the Regional Comprehensive Economic Partnership free trade agreement, the world’s largest trade deal which was signed last year by 15 Asia-Pacific nations.
Calculated in terms of GDP for FY19, the RCEP is expected to add up to 140 billion USD to the Japanese economy and will generate 570,000 jobs, said the government’s first published estimates about the trade deal. This projected boost is much larger than the government’s previous estimates of a 1.5% increase from the 11-member Trans-Pacific Partnership (TPP) and a 1.0% rise from the economic partnership agreement with the European Union.
A Japanese foreign ministry official acknowledged that the “RCEP could affect the economy significantly” and that it will cover “about 46% of Japan’s total trade compared with about 15% in the case of the 11-member TPP and about 12% in the case of the Japan-EU EPA.”
Signed between the 10 ASEAN nations, China, Japan, New Zealand, South Korea and Australia last November, the deal will eliminate tariffs on 91% of goods and set common rules on investment, intellectual property and e-commerce. It is expected to reinvigorate supply chains in the region and make them more effective for businesses and promote regional economic integration. The 15 member countries account for about 30% of the world’s population and 30% of global GDP as of 2020, making it the biggest trade bloc in history.
The pact will come into effect once it has been ratified by any of the six ASEAN members and any 3 other members. It is Japan’s first trade deal involving South Korea and China, two of the major economies in Asia alongside Japan. China is Japan’s largest trading partner while South Korea is the third-largest.