COVID-19 brought many challenges for businesses; increased cost of freight, supply chain issues, international travel restrictions and more posed significant hurdles for businesses to overcome. Despite this, one-third of Australian businesses experienced an increase in export revenue, revealed by the recent DHL Export Barometer report. Moreover, businesses that experienced a decline in export trade will return to pre-COVID levels by November 2022. To achieve this, Australian businesses are ready to adopt innovative strategies that make international trade more accessible.
Enter the RCEP, or Regional Comprehensive Economic Partnership.
A new trade agreement sounds lucrative, but what exactly is the RCEP? In mid-November 2020, the Regional Comprehensive Economic Partnership was signed by 15 member countries. These include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam, China, Japan, South Korea, New Zealand and, of course, Australia. This extensive list of signatories makes the RCEP the largest trade bloc in history and the first trade agreement between China, Japan and South Korea.
The RCEP trade deal expects to eliminate around 90% of tariffs on imports between signatories within the next 20 years. This modern free trade agreement covers trade in goods and services, investment, economic and technical cooperation. It will also establish common boundaries for e-commerce and intellectual property. This comes, strategically, at a time where international trade between many countries has been hindered by issues related to the COVID-19 pandemic.
As an open economy emphasising global trade, Australia is in a strong position to benefit from the RCEP agreement. Alongside the Free Trade Agreement (FTA) that Australia signed with the United Kingdom in December 2021, this lucrative trade deal will see Australia further diversify its global market and hasten its economic recovery. This is unsurprising as the RCEP will strengthen the existing economic relationship between Australia and countries in APAC; already three-quarters of Australia’s two-way trade takes place between APAC countries.
In short, the RCEP deal unites Australia’s primary trading partners under one economic framework that accounts for nearly 60% of its trade and two-thirds of its global exports. This leaves Australia in a prime position to recover its thriving global export trade.
Australia’s RCEP trade agreement looks promising for the future of international trade in the APAC region, but what does this mean on a local level? How will Australian businesses benefit from the regional trade deal?
Australia’s economy is highly dependent on trade. In fact, 1 in 5 jobs nationally lies in the trade industry. The benefits of the RCEP trade deal are, therefore, mostly long-term with trade boosting over time.
The gradual trade increase will allow Australian businesses to expand and invest in more revenue-generating projects, thus drawing demand for workers. All in all, these will stimulate the local working economy, driving down unemployment rates on a national level.
Part of the RCEP’s appeal is the development of common trade rules between member countries. This simplifies international trade for Australian businesses looking to expand their client base or recover their international trade relations. It offers a singular framework for businesses to access lower tariffs and increase exports. In short, this allows local businesses to simplify their trade relations and direct their resources to other areas.
Alongside the appeal of lower tariffs, Australian businesses and international signatories will be bound by a common set of rules surrounding intellectual property. With this agreement, Australian businesses can feel confident participating in the global marketplace with the knowledge that their intellectual assets are protected. This additional layer of security will encourage trade between RCEP member countries and further strengthen their economies.
With the international trade scene within APAC progressing, Australian businesses now have available a range of opportunities to expand internationally. At DHL Express, we are dedicated to staying abreast of international trade developments such as the RCEP so we can continue to deliver an exemplary service to businesses looking forward to global expansions.
With international gateways at every major Australian airport and a specialised in-house customs team catering to time and day definite courier services, rest assured our international delivery remains efficient and effective. Apply for a DHL Express business account and take your place in the global market today.