New Economic Trade Agreement:

 https://mainichi.jp/english/articles/20201115/p2g/00m/0bu/060000c

Article:

TOKYO (Kyodo) -- Asia-Pacific countries including Japan, China and the 10 members of ASEAN signed the world's largest free trade deal on Sunday, wrapping up eight years of negotiations following the withdrawal of India.

The 15 signatories to the Regional Comprehensive Economic Partnership reached the agreement, aimed at cutting tariffs and establishing common rules in areas such as e-commerce and intellectual property, during a virtual leaders' summit.

RCEP -- also including Australia, New Zealand and South Korea -- encompasses nearly a third of both the world's gross domestic product and its population.

Ideas and Commentary:

Considering the pandemic or even the pre-pandemic period this might bring new opportunities for Japanese business and maybe even Japanese consumers.

To be fair and honest, I think Japan has been a little behind in free trade agreements compared some other countries. But this agreement should be good for Japan as it might open more opportunities for Japanese companies and Japanese consumers.

Free trade agreements don't always mean lower prices for consumers for example. For example in South Korea, the US/Korea FTA that was finally signed and went into affect around 2012/14 was supposed to of course bring lower prices to South Korea for US products. 

However, as some articles and research showed the end user consumer didn't really benefit as much as expected with lower prices. The wholesalers or middlemen were the ones benefiting from the FTA while the end user consumers were still seeing high prices on many US products. The middlemen were not passing on the lower prices to the consumers. 

Article:

"We believe that RCEP, being the world's largest free trade arrangement, represents an important step forward toward an ideal framework of global trade and investment rules," the leaders said in a joint statement issued after the meeting.

The deal "is critical for our region's response to the COVID-19 pandemic and will play an important role in building the region's resilience through an inclusive and sustainable post-pandemic economic recovery process," they said.

It will be Japan's first trade deal with both China, its largest trading partner, and South Korea as negotiations for a trilateral pact have yet to be concluded.

Ideas and Commentary:

A South Korean article indicated that the RCEP will have a market of about a third of the global population and will be about 28% of all global trade.

Many Asian economies, including Japan seemed to be in the process of recovery mostly a long recovery from the virus situation.

The RCEP has the potential to maybe shorten the recovery time. But of course just be an agreement is signed does not mean overnight trade between countries will begin to improve. There are many variables to be worked out with the virus situation. But its a step in the right direction.

Of course any new FTA can bring potential benefits and potential negatives. Most likely it could mean more competition for some products and businesses in Japan, as tariffs are lowered and consumers are in favor of products from other countries it be a challenge for some companies.

But as the South Korean article mentions,"tariffs may be gone but there will be other challenges both expected and unforeseen, mostly product quality and price."

But at the same time, no one can debate the quality of Japanese products, but at the same time, the price of some Japanese products might be enough for some Japanese consumers to think twice and give some thought to a lower priced foreign products, if of course the quality is similar. 

Article:

Speaking to reporters after signing the agreement, Japan's trade minister Hiroshi Kajiyama said the 15 countries were seeking to wrap up domestic procedures and put the pact into effect "as quickly as possible."

The deal will take effect after ratification by six members of the Association of Southeast Asian Nations and three of the other countries.

A special arrangement was made to facilitate India's return, exempting it from a rule barring new entrants to the framework for 18 months following the pact's entry into force. India said in November last year it will no longer take part in negotiations amid concerns that its trade deficit with China would grow.

Ideas and commentary:

Unfortunately what is not said here is the political friction between some countries, not to get into that idea but its unfortunate that politics is part of business and international/global trade.

Just one case in point; a rather large company, to be unnamed in South Korea has many suppliers in Japan. They would prefer and with many SK companies and many Japanese companies to just conduct business and stay out of politics. This one large company in South Korea always goes to Japan to meet with its Japanese suppliers to ensure them that they are key suppliers and they prefer not to get involved with the political issues at hand. 

But again unfortunately many Japanese companies and many Korean companies have been affected by recent political events.

Article:

Vietnamese Prime Minister Nguyen Xuan Phuc, who chaired the leaders' summit, promised to "always keep the door open for India" and "facilitate their participation as best as we can."

Kajiyama hailed the deal as creating new opportunities for Japanese manufacturers and farmers, saying it will "contribute greatly to increasing exports to Asia."

Consumers across the bloc will also benefit from "more competitive options to consider when they purchase their products," Singaporean trade minister Chan Chun Sing said in a press conference.

Ideas and Commentary:

Yes, potentially the idea is for consumers to benefit from the lower tariff taxes or prices. But lets be a little real here, how many companies will actually "pass on" the lower prices they get for the products to the end user consumers. 

If there isn't there needs to be rules or regulations that ensure that not just companies but also the end user consumer benefits from the reduced tariffs supposedly meaning lower prices for consumers. 

And of course with the idea of lower prices mean more competition in the market place. Again some companies/business in Japan may be challenged with finding ways to compete with lower prices and or better quality if their products are in direct competition with foreign products coming into Japan.

And with the pandemic situation, we might see many or some of these products being soled online with Amazon Japan, Rakuten, or even any other online site, including sites on countries in the RCEP willing to ship to Japan. 

There are already many global sites around the world that ship products to Japan. 

Article:

Negotiations for RCEP began in 2012, with China pushing it as an alternative to the U.S.-led Trans-Pacific Partnership. President Donald Trump later pulled the United States out of TPP talks, and a revised deal was signed among the remaining 11 countries including Japan.

Despite RCEP's historic size, it falls short of other major trade deals in the level of market access. The deal will eliminate tariffs on 91 percent of goods, less than the revised TPP or Japan's economic partnership agreement with the European Union.

Japan will eliminate 61 percent of tariffs on agriculture imports from ASEAN nations, Australia and New Zealand, 56 percent for China, and 49 percent for South Korea, while maintaining tariffs on five product categories -- rice, wheat, dairy products, sugar, and beef and pork -- to protect domestic farmers.

Meanwhile, the other 14 countries will cut tariffs on 92 percent of Japanese industrial exports including automobile parts and steel products.

ASEAN consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Ideas and Commentary:

No FTA is perfect and there are always positives and negatives with any FTA. The RCEP is no exception. Being able to keep every country happy in the trade negotiations is at best impossible. A lot of compromise most likely had to go into this agreement.

Unfortunately the size of the country and its political power might have a lot to do with what is agree upon in many FTA's. 

And again, even though we see reduced tariffs on many products, will companies "pass on" the lower prices to the end user consumer is the real question.

For example during the Korea/US FTA negotiations, in what should have been business as usual meaning the negotiators worked on the FTA with little news or fanfare.

Unfortunately there was a not of "noise" in the news and society about the FTA. Most  of the "noise" was not so good.

Especially from the agricultural sector and there were many rumors and such that were completely untrue. 

The South Korean government for years had made attempts to prepare farmers and others for the opening of the economy related to FTA's but for some it was never enough or accepted. 

The idea that Japan is protecting some groups such as farmers is not new or expected. And to be fair and honest its quite likely in South Korea and Japan, some of these farmers don't have any means to really be competitive with their farm products if lower priced products are brought into the country.