In this era of a multipolar world order, the rise of free trade agreements has led to an increase in mega-FTAs, such as the Regional Comprehensive Economic Partnership and the African Continental Free Trade Area, which are transforming the global economy.
As the world emerges from the unprecedented disruption to the global economy brought on by the COVID-19 pandemic, the RCEP and AfCFTA are catalysts for unlocking new opportunities for international economic and trade cooperation among member countries, while strengthening the global supply chain of goods and services.
The RCEP — which covers about 2.26 billion people and whose member economies have a combined GDP of approximately $26 trillion — is revered as a "living agreement" that is pegged on constant dialogue by its members to manage the growing complexities of trade agreements.
Members of the RCEP, which has created the world's largest free trade area, are China, South Korea, New Zealand, Japan, Australia and the 10 economies of the Association of Southeast Asian Nations, accounting for about 30 percent of global GDP. This growth is a clear indication that the RCEP is a game changer for global economic recovery.
Its key areas of focus are trade in goods and services, animal and plant quarantine, investment access, economic and technical cooperation, intellectual property, dispute resolution, e-commerce and technology. The RCEP aims, among other things, to promote the free flow of production factors including capital, raw materials, technology, information and data.
According to China's Ministry of Commerce, since the RCEP was implemented, trade in goods among member countries has increased, and regional trade has grown into a key factor stabilizing and driving their foreign trade growth. In addition, it is estimated that under the agreement, more than 90 percent of trade in goods among member states will gradually be tariff-free.
A study by the Washington-based Peterson Institute for International Economics estimates that the RCEP could account for up to $500 billion in world trade by 2030.
Clearly, the RCEP is becoming a more prosperous regional market that promotes wider integration, as well as higher-level and deeper cooperation among member states.
The question arises as to how the RCEP, within a very short period of implementation, has begun to spur economic growth in member countries. Furthermore, what lessons can the African Continental Free Trade Area learn from the RCEP to help it become a driving force for achieving economic growth and the goals of the African Union's Agenda 2063 for sustainable development on the continent?
First, the RCEP supports an open, free, fair, inclusive and rules-based multilateral trading system. These guiding principles have promoted a comprehensive, mutually beneficial and high-level economic partnership that is devoid of nationalism and protectionism.
Second, e-commerce platforms have increased trade. RCEP member countries use public service platforms and promote whole-process digital services related to RCEP certificates of origin to enhance efficiency, so that members can fully benefit from the free trade agreement.
Third, RCEP member countries are investing heavily in infrastructure to curb illicit practices across the region that could hurt trade.
Fourth, the atmosphere of relative peace and stability within and among RCEP member countries has enabled the region to be remarkably resilient in the aftermath of the post-pandemic economic crisis.
These lessons and others from the RCEP will help the African Continental Free Trade Area lift nearly 100 million Africans out of poverty. As envisioned by Wamkele Mene, the secretary-general of the AfCFTA, if the continental free trade area is effectively implemented by 2035, it has the potential to contribute about $450 billion to Africa's overall GDP.
Therefore, the task ahead for the AfCFTA, in order to create a bigger, more efficient and integrated regional market for African products, is to ensure that all 55 member states of the African Union enjoy peace and stability. This would provide a sustainable environment for promoting intra-African and external direct capital flows to African countries.
In addition, the Pan-African Payment and Settlement System, an e-commerce platform within the AfCFTA, needs to be fully operationalized. This will help various businesses enjoy the benefit of receiving and making payments instantly, which will increase trust and trade volumes in Africa.
Indeed, as the RCEP continues to revolutionize trade in Asia and the neighboring region, the AfCFTA has ambitious, long-term goals for deepening integration among African Union member states and promoting the realization of the AU's Agenda 2063 to build a prosperous and united Africa.
The author is executive director of the China-Africa Center at the Africa Policy Institute in Kenya. The views do not necessarily reflect those of China Daily.
Source: China Daily Global
