Commentary: Don't be too quick to dismiss the economic benefits of RCEP for Southeast Asia

However, economic modelling typically assumes that every potentially eligible good currently captured by trade flow statistics will receive whatever tariff benefits that are promised in the deal.The best commentaries and analysis to better help you see beyond today’s news headlines. Subscribe to CNA’s Commentary newsletter.This service is not intended for persons residing in the EU.

But such new trade flows in shampoo, seafood or apparel will not show up in the economic modelling of existing FTAs, as UNCTAD has done, as they are new gains that will only kick in later.Determining the impact of the RCEP or any FTA also depends on existing conditions in other ways.Leaders pose for a group photo during the 3rd Regional Comprehensive Economic Partnership Summit in Bangkok on Nov 4, 2019, on the sidelines of the 35th ASEAN Summit.

Firms might already be enjoying duty-free treatment for their products under other FTAs, like ASEAN-China. Economic models that look at the RCEP in silo, as the UNCTAD study has done, therefore struggle to capture this level of complexity. Tariffs are always overweighted in economic models as they are easiest to see and count. But RCEP, like other comprehensive FTAs, includes significantly more than just tariff reductions.Changes in customs procedures, to name just one element of RCEP, can have an even greater impact on a firm than a reduction in tariffs as the cost of delays at the border can be quite high and often hit the bottom line more than a tariff rate adjustment.

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