The RCEP Agreement Affects EU – Political & Economical implications between Australia and China

Regional Comprehensive Economic Partnership (RCEP) is a colossal deal that might affect the financial position of the European Union (EU). With three manufacturing powerhouses coming together, production might shift to Asia, and Australia is allied with the Asian giant China. Read this article to discover how RCEP affect the EU.

Many controversies surround the heated and recent trade conflict between China and Australia, and the media can’t get enough of it. However, during all the commotion and negativity about Australia and China trade relationship, people have almost forgotten about RCEP. While most countries, including The Association of Southeast Asian Nations (ASEAN), New Zealand, Australia, and others, might benefit from this contract. Some of the biggest European powers are excluded from this international exchange of goods and services. This might seem like a casual, though, for some people, the recent dispute between China and Australia at the time of RCEP shows some European agendas at play.

The Effect of RCEP on EU

Viewed from EU firms’ standpoint, the RCEP looks like a mammoth deal between three powerhouses, namely, China, Japan, and the Republic of Korea(South Korea). While other countries are also a part of the RCEP agreement, this deal’s main beneficiaries are considered the three manufacturing powerhouses. The RCEP is considered an attempt from China, Japan, and Korea to expand their trade in Asia. Moreover, the RCEP contract aims to mitigate Tariffs, and China has committed to reducing 86% of Tariffs on imports from Japan. These three nations combined have generated $5.3 Trillion in manufacturing, which is $1 Trillion more than the combined trade between the USA and the European Union(EU).

No matter how the EU reacts and claims that this agreement does not affect them in any way, it’s clear from the numbers that manufacturing will shift to Asia. Moreover, the RCEP is lenient in trade regulations. As most Free Trade Agreement (FTA)’s impose a limitation on products that use components from trade ban countries, RCEP does not cause such obstacles in business.

These are some of the points that have become troublesome for the EU to swallow, and the trading world seems to be dominated by this new agreement. The combined population of China, Japan, and Korea is 1.6 billion, and if that’s not enough, the RCEP opens up a market of 675 million people. This combined is 30% population of the world, and it goes to show how large the opportunity is.

How Can Australia Benefit From This?

The sheer numbers of the RCEP deal are staggering and a golden opportunity for any entrepreneur. Australia can leverage the population and the trade opportunity by expanding the exports of its lobster, wine, barley, and other products. However, out of the 1.6 Billion population, most people are residents of China. In these circumstances, spoiling trade relationships with China is not an option. Australian entrepreneurs need to think and evaluate the situation themselves. How much can they benefit by exploiting trade with China and exporting to the rest of 675 million people? The market size is drastically small, and so is the purchasing power.

Final Thoughts

While most people will look through numbers and be about their business, it’s crucial to highlight such a colossal trade agreement’s impacts. While the EU suffers from a lack of trade and Australia dominates the Wheat, Wine, and Barley market, it crosses one’s mind that the EU might be interested in spoiling this deal and keep Australia out of it. This a long-shot, but seeing the recent China Australia trade conflict, exchange of words, and harsh trade bans, it is apparent that something is not right. At the Australia China Entrepreneurship Club, we create a positive relationship between Australia and China and facilitate trade. If you have any thoughts to share about the impacts of RCEP on the EU and how Australia can benefit from it, comment below and express your thoughts.