RCEP and Australian Manufacturing: Opportunities and Challenges

This report provides an analysis of the Regional Comprehensive Economic Partnership (RCEP) and its potential impact on the Australian Advanced Manufacturing Council. It discusses the opportunities and challenges that RCEP presents for Australia, particularly in terms of trade barriers, market access, and investment. The report highlights the conflicting priorities and competing interests among RCEP member countries, as well as the differences between RCEP and the defunct Trans-Pacific Partnership (TPP). It emphasizes the need for Australia to balance its international trade objectives with its desire to play a significant role in shaping the governance and core concerns of the deal. The report also suggests that Australia should advocate for transparency, liberalization of investment, and the protection of intellectual property rights within the RCEP framework. Finally, it concludes that RCEP has the potential to deliver significant opportunities for the Australian Advanced Manufacturing Council, and that Australia should strive to strengthen its position in the negotiations to ensure a beneficial outcome for its economy.

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Regional Comprehensive Economic Partnership (RCEP) and Australian
Advanced Manufacturing Council.
The Trans-Pacific Partnership (TPP) that has now become defunct provided a chance to all strata
to make sure that it was deeply involved in the regional alliance framework taking place in the
Asia Pacific region and continued with the process of economic integration with its regional
counterparts. Therefore it is the geopolitical imperative of Australia to make sure that a leading
role is played by it in the discussions related with researchers and the peculiarities of the
Regional Comprehensive Economic Partnership (RCEP) that is led by ASEAN and in this way
consolidating its position as the bastion for the governance of the deal as well as the intellectual
property measures and environmental standards that continue to plague the RCEP till now.1
Under the circumstances it is necessary that its influence and experience is used by Australia in
these areas for the purpose of making sure that it remains a valued partner during the
negotiations and establishes itself as a leading an incredible power in the Asia-Pacific,
particularly in view of the growing absence of the United States.
The RCEP can be described as a proposal for regional free trade area. In the beginning it
involved the 10 ASEAN Member States and the nations that have present Free Trade
Agreements (FTAs) with ASEAN. These were Australia, New Zealand, India, Japan, China and
South Korea. According to the experts, RCEP has the potential of delivering high-quality and
comprehensive, mutually beneficial economic agreement.2 Such agreement will allow the
member states to form partnership to having a wide range of issues. These include but are not
restricted to trade and investment taking place in goods and services, intellectual property and
competition measures, economic and heuristic cooperation and disputes and their resolution
mechanisms.
1 Heagney, K. J. (2013) The RCEP (Regional Comprehensive Economic Partnership) and the Possible Impact of the
RCEP on Lao PDR
2 Rose, S.K. and Lee, H. L. (2009) Non-CO2 Greenhouse Gas Emissions Data for Climate Change Economic
Analysis. In: Hertel, T.W., Rose, S.K. and Tol, R.S.J., Eds., Economic Analysis of Land Use in Global Climate
Change Policy, Routledge, London, 89-120

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It is widely agreed that there are immense opportunities present. The 16 countries taking part in
RCEP account for nearly 50% of the population of the world. At the same time these countries
have 30% of global GDP and control nearly 35% of the global exports. These economies account
for nearly 60% of the two-way trade taking place in Australia, 18% of its two-way investment
and more than 65% of the exports of Australia.3 Under the circumstances, it can be stated that
RCEP is going to be conducive for lowering the trade barriers with these nations and it will also
help in securing improved market access to the exporters and investors from Australia.
However, there are conflicting priorities and competing interests that challenge the RCEP
negotiations. These are the result of varying level of political and economic development and the
member countries. On the other hand, there were a host of accords under the TPP between the
governance for state owned enterprises, environmental standards, intellectual property
transparency, data liberalization and the resolution of disputes. In comparison, such provisions
are not present in the RCEP. It does not provide that the member states shall protect the rights of
the laborer or to improve environmental standards as was provided by the TPP and governance
and transparency related with the deal have been pointed out as a probable concern.
Therefore it is imperative that Australia should try to maintain a balance between its international
trade objectivists and the desire of the nation to play a significant role as major negotiated
regarding the wider governance and core concerns of the deal. For Australia it will be beneficial
to make sure that the deal provides greater economic and investment freedom to Australia.
Advocating for transparency in and regulations in major RCEP markets, allowing the investors in
Australia to set up branches in partner countries 84 entry joint venture with a local partner and
easing the FDI restrictions in some sectors or corporations will result in increasing the outgoing
as well as incoming investment in Australia and at the same time it will also help the investors in
Australia to achieve better control over their Investments, particularly in case of RCEP partner
nations.
At the same time, it is also required that a balance should be maintained by Australia between the
investor state dispute settlement clauses and simultaneously encouraging the investments and
also promoting judicial and regulatory transparency along with the need for preventing Australia
3 Akahori, H., Masuda, K. and Yamamoto, Y. (2014) Agricultural Nutrient Balances under a Japan-China-Korea
Free Trade Agreement: Nitrogen and Phosphorus. Journal of Rural Problems, 50, 60-64

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from prosecution by corporations from other countries. The effective management of the points
of tension that are present between different countries need to be a priority for the government of
Australia as a method of strengthening its position during the discussions.
One example of this point of contention can be given in the form of tariff reduction in India.
Their willingness on the part of India to adopt single-tier tariff reduction approach is related with
its demand for greater market access in some of the major RCEP partner nations. The single-tier
tariff reduction is going to be beneficial for the industry in Australia as per Australian Advanced
Manufacturing Council, particularly the dairy, food and wine sectors. This is particularly true for
the dairy sector, in view of the recent decline witnessed in the price of milk, and also the
reduction in demand from the importers of milk in Australia. On the other hand, a multi-tiered
approach will result in Australia being on a much lower tier due to which it will become
significantly costly to access the core markets of India.
On the other hand the other RCEP nations are not ready to further open access to the Indian
service providers. India itself is required to maintain a balance between their need to gain market
access to the other RCEP partner nations and at the same time acknowledging the threat that is
posed by China, Japan and South Korea to the manufactured goods sector of India. Under these
circumstances, Australia is required to make sure that it advocates in favor of single tier tariff
reduction approach and at the same time, make efforts for encouraging the RCEP partner nations
to liberalize, at least partially, their economy to the Indian service market.
The differences that are present in the priorities and the economic circumstances of a number of
RCEP partner nations result in making the negotiations particularly tricky. Due to this reason, it
becomes particularly significant that diplomatic tact is used by Australia for managing the
discussions and positions itself as a key stakeholder during the negotiations.4
The approach adopted by Australia for dealing with any impediments should be to encourage a
transparent and open environment for the investors from Australia in major regional economies
like China, India and Indonesia and also to encourage the member states to prioritize the
liberalization of two-way investment and to achieve improved access for the investors from
4 Lee, H. and Itakura, K. (2014) TPP, RCEP, and Japan’s Agricultural Policy Reforms. OSIPP Discussion Paper,
Osaka School of International Public Policy, Osaka

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Australia in the key regional markets of Australia like agriculture, mining, manufacturing,
fisheries and forestry. At the same time Australia is also required to play the role of a bastion to
the governance of the deal, regularly working for increased transparency in communication and
cooperation, defining control mechanisms and the dispute frameworks, advocating in favor of
rigorous intellectual property rights and measures related with the protection of environment and
also for the purpose of promoting a deal that can be beneficial for the wider collective instead of
being marred by petty grievances.5 By doing so, Australia will be able to strengthen its position
in the negotiations of the deal and also to make sure that it plays a significant part of wider
social, economic and political architecture of Asia-Pacific during the coming years, irrespective
of the fact that the United States has really decided to leave the region.
It is widely claimed that RCEP is ASEAN centered proposal related with regional free trade.
Initially it would include 10 member states of ASEAN. The partnership is going to be built on
and expand the present FTAs of Australia with ASEAN NEW Zealand. At the same time this
partnership also complements the participation of Australia in bilateral FTAs that have been
concluded with different nations. It can also be stated that RCEP can probably deliver significant
opportunities for Australian Advanced Manufacturing Council
in Australia. The 16 countries participating in RCEP account for nearly half of the population of
the world, more than 30% of the GDP of the world and over quarter of the global exports. The
RCEP negotiations have been launched with the objective of achieving a modern, high quality,
comprehensive and mutually beneficial economic partnership agreement. This agreement is
going to cover trade in goods, services, economic and technical cooperation, investment, e-
commerce, intellectual property, competition, dispute settlement and other related issues. This
partnership is a part of the strategy conducted by the government to lower trade barriers and also
to secure better market access for the exporters of goods and services from Australia as well as
the Australian investors.6
Regarding the impact of RCEP on trade and commerce in Australia it needs to be mentioned that
the countries participating in RCEP are regional neighbors and significant economic partners of
5 Kee, H. L., A. Nicita, and M. Olarreaga, (2006) “Estimating Trade Restrictiveness Indices,” Trade Policy Research
Working Paper, No. 3840, World Bank, Washington DC.
6 Hertel, T.W., Ed. (1997) Global Trade Analysis: Modeling and Applications. Cambridge University Press,
Cambridge

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Australia. At the same time, this partnership also provides a chance to strengthen regional trade
and investment environment and also to benefit the consumers and boost regional economic
confidence. In case of RCEP, it is required that Australia should seek to secure commercially
meaningful market access for its investment, goods and services. It also needs to secure modern
rules that can deal with contemporary business priorities like facilitating regional supply chains
and also increasing the use of e-commerce.7 Similarly it is also required that ongoing cooperation
mechanisms should be settled for supporting implementation and contributing to the economic
reform environment in the region.
Therefore in the end, it can be stated that an attempt has been made to contribution to the debate
going on regarding the impact of RCEP particularly on Australian Advanced Manufacturing
Council in Australia. The relations between faith and environment have also been considered in
context of RCEP. It is also being examined if the RCEP is going to have a significant economic
impact on Australia. It is estimated that the 16 participating nations of RCEP are going to have a
positive impact on real GDP. As compared to it, the non-RCEP economies, apart from Russia,
are going to experience a negative effect on the real GDP. Moreover, the farm output is also
expected to decline in Japan and the US. On the other hand it is expected to rise in Australia.
Similarly the output in case of electric industry which is one of the largest sources of CO2
emissions is also expected to rise in case of Japan and India. Availability is expected to decrease
in case of Australia as well as in China, United States and the EU.8
It also needs to be noted that the Regional Comprehensive Economic Partnership (RCEP) is
going to become a comprehensive free-trade area centered on ASEAN. The 16 negotiating
countries are working hard for arriving at a substantial conclusion. It is believed that RCEP is
going to make a significant contribution in Asian as well as global economic cooperation. It is
expected that RCEP is going to become the second major trade agreement led by Asia after the
exit of the United States in 2017 from the Trans-Pacific Partnership (TPP). The rest of the 11
members of TPP renamed it as the Comprehensive Progressive Trans-Pacific Partnership and
7 Bellanawithana A., B. Wijerathne, and J. Weerahewa, (2009) “Impacts of Non Tariff Measures (NTMs) on
Agricultural Exports: A Gravity Modeling Approach” paper presented in Asia-Pacific Trade Economists’
Conference, Trade-Led Growth in Times of Crisis, ARTNeT, ESCAP, United Nations, Bangkok
8 Das, Sanchita Basu (2012) RCEP: Going beyond ASEAN+1 FTAs, ISEAS Perspective, Institute of South Asian
Studies, Singapore

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generally retained its contents intact. It was signed in March 2018 and going to take effect in
December 2018. The RCEP is also converging on an agreement between the members but they
have very little chances of completing the deal in this year.9
After it has been completed, the RCEP to is going to offer significant boost to the global trading
system based on rules. The partnership is going to provide a free trade area for record books,
which is huge in output and population. It is also the most ambitious agreement ever negotiated
by the developing nations. Therefore the impact for the industry in Australia is also going to be
significant. It has the potential of delivering significant opportunities for trade and industry.
9 Fukunaga, Y. and I. Isono, (2013) “Taking ASEAN+1 FTAs towards the RCEP: A Mapping Study,” ERIA
Discussion Paper Series, 2013-02, ERIA, Jakarta

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Bibliography
Akahori, H., Masuda, K. and Yamamoto, Y. (2014) Agricultural Nutrient Balances under a
Japan-China-Korea Free Trade Agreement: Nitrogen and Phosphorus. Journal of Rural
Problems, 50, 60-64
Bellanawithana A., B. Wijerathne, and J. Weerahewa, (2009) “Impacts of Non Tariff Measures
(NTMs) on Agricultural Exports: A Gravity Modeling Approach” paper presented in Asia-
Pacific Trade Economists’ Conference, Trade-Led Growth in Times of Crisis, ARTNeT,
ESCAP, United Nations, Bangkok
Das, Sanchita Basu (2012) RCEP: Going beyond ASEAN+1 FTAs, ISEAS Perspective, Institute
of South Asian Studies, Singapore
Fukunaga, Y. and I. Isono, (2013) “Taking ASEAN+1 FTAs towards the RCEP: A Mapping
Study,” ERIA Discussion Paper Series, 2013-02, ERIA, Jakarta
Heagney, K. J. (2013) The RCEP (Regional Comprehensive Economic Partnership) and the
Possible Impact of the RCEP on Lao PDR
Hertel, T.W., Ed. (1997) Global Trade Analysis: Modeling and Applications. Cambridge
University Press, Cambridge
Kee, H. L., A. Nicita, and M. Olarreaga, (2006) “Estimating Trade Restrictiveness Indices,”
Trade Policy Research Working Paper, No. 3840, World Bank, Washington DC.
Lee, H. and Itakura, K. (2014) TPP, RCEP, and Japan’s Agricultural Policy Reforms. OSIPP
Discussion Paper, Osaka School of International Public Policy, Osaka
Rose, S.K. and Lee, H. L. (2009) Non-CO2 Greenhouse Gas Emissions Data for Climate Change
Economic Analysis. In: Hertel, T.W., Rose, S.K. and Tol, R.S.J., Eds., Economic Analysis of
Land Use in Global Climate Change Policy, Routledge, London, 89-120