RCEP is both threat and opportunity for Czechia - experts

The Regional Comprehensive Economic Partnership (RCEP), a new free trade agreement signed today by 15 Asia-Pacific countries, both poses a threat and creates an opportunity for Czechia, depending on the point of view, according to a CTK poll of analysts.

The 15 economies, including China, Japan, South Korea and Australia, formed the world's largest free trade bloc, covering more than two billion people and nearly a third of the global economy. Asia-Pacific countries are lowering trade barriers, which can be good news for the open Czech economy, especially now that it is under pressure of decreasing demand because of growing protectionism, Purple Trading analyst Stepan Hajek said. "It is another step towards globalisation which has been in danger because of the coronavirus pandemic," Hajek said.

The EU signed a free trade agreement and an investment protection agreement with Vietnam, a RCEP signatory, this year, which makes Vietnam and other countries, such as South Korea, a semi-open door to the new trade bloc for Czech companies, Chamber of Commerce spokesman Miroslav Diro said. However, only highly sophisticated, specialised and competitive Czech products can become successful in the region, taking account of tariff elimination between the signatories and major advances that some of the economies have made over the past few years, Diro said.

RCEP points to China's steps toward reducing its dependency on the USA and Europe, which is definitely bad news for Czechia, Capitalinked.com analyst Radim Dohnal said. It will be gradually more difficult to be active in the RCEP markets, while easier for local products, he said.

Czech companies would benefit from a free trade agreement between the EU, Australia and New Zealand quickly following RCEP, and also from US President-elect Joe Biden re-evaluating the Trans-Pacific Partnership without the USA, Confederation of Industry spokeswoman Lenka Dudkova told CTK. That would help Czech companies profit from all free trade deals and partially offset China's influence, she said. Trade without barriers is always good news, if the rules are fair for everyone, Dudkova said.

Signing of RCEP might have been helped by the current coronavirus situation, Natland chief economist Petr Barton said, adding that the world dominated by Asia-Europe and Asia-US trade has probably changed for a few years. RCEP is supposed to increase trade between its signatories at the expense of the USA and the EU, which is not good news for Czechia, but it is good for the global economic development, Trinity Bank economist Lukas Kovanda said.

RCEP countries are not important export territories for Czechia, Starteepo analyst Dusan Jilcik said. The EU accounts for 80 percent of Czech exports, however, a huge tariff-free area in Southeast Asia is still rather bad news for Czechia and the EU, he said. RCEP, signed on the sidelines of a meeting of the Association of Southeast Asian Nations (ASEAN) in Hanoi, lowers tariffs and sets common trade rules within the bloc. It covers trade, services, investment, telecommunications and copyright, according to German news agency DPA.

Source: ČTK