FPO forecasts RCEP deal to fuel export bonanza
Thai exports are expected to receive a windfall thanks to the signing by 15 Asia-Pacific economies of a huge trade pact during the Asean Summit in Hanoi in mid-November, says the Fiscal Policy Office (FPO).
The Regional Comprehensive Economic Partnership (RCEP) was signed at the end of a four-day Asean summit on Nov 15 and must now be ratified before coming into effect, a process that will take months to start and years to complete, Reuters reported.
The 15 signatories were China, Japan, South Korea, Australia, New Zealand and the 10 Asean member states (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam).
RCEP is considered to be the largest trade pact in the world, covering nearly a third of the global population and about 30% of its GDP.
The signing of the RCEP draft agreement is expected to help stimulate regional trade, giving Thai exports a bump, said Kulaya Tantitemit, acting director-general at the FPO.
The draft deal will enable regional trade to become more convenient and streamlined, especially regarding the issue of the proportion of origin of goods products, also known as rules of origin, said Ms Kulaya.
Rules of origin is a criteria required to determine the national source of a product. Duties and restrictions in several cases depend upon the source of imports, according to the World Trade Organization.
Such rules incorporate how a product, qualified for tax benefits from the RCEP agreement, must have an agreed proportion of its contents relating to the origin of a national source of production from RCEP member countries, she said. In other words, to receive tax benefits, a manufactured product will use raw materials cumulatively imported from RCEP member states to meet the agreed proportion requirement.
RCEP focuses heavily on cutting tariffs and increasing market access, but is seen as less comprehensive than the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
The pact also requires fewer political or economic concessions and has less emphasis on labour rights, environmental and intellectual property protections and dispute resolution mechanisms.
China's recovery would also influence the recovery momentum of Thailand's economy as China is a key destination of Thai exports, Ms Kulaya said.