The effect on human health has been the most devastating and observable of all the outcomes of COVID-19. As a consequence, a global economic catastrophe resulting from this pandemic is eminent. Since the outbreak in 2019, many industries have been plagued by extreme uncertainties, and this scenario is especially evident in travel, as our beloved travel industry is strongly reliant on close interaction and human mobility.
Nevertheless, there is always hope for a better and brighter future, e.g. massive vaccination exercises around the world are in the swiftest possible process, which gives us light at the end of the dark tunnel.
In this edition of Bow-Tie Briefing, we discuss the recovery from an economic angle. A recent deal reached by 15 APAC countries, (10 ASEAN countries – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam – plus Australia, China, Japan, New Zealand and South Korea), will be the key motivator for economic growth. The deal is called Regional Comprehensive Economic Partnership (RCEP).
RCEP is the largest Free Trade Agreement (FTA) to date in the world, comprising about 30% of global Gross Domestic Product (GDP) and close to a third of the world’s population. It includes:
- Trade in Goods: Tariff elimination on at least 92% of goods traded. Additional preferential market access within members states to allow temporary duty free admission of goods into the region;
- Trade in Services: At least 65% of service sectors will be fully open with increased foreign shareholding limits, including in professional services, telecommunications, financial services, computer and related services, distribution and logistics services;
- Non-Tariff Measures (NTMs): Stronger provisions to address NTMs, including a platform to allow member states to conduct technical consultations, and enter into stronger binding commitments to improve the transparency on import regulations;
- Rules of Origin: Streamlined rules to give businesses greater flexibility to tap into preferential market access benefits. Regional cumulation provisions will also allow businesses to take advantage of regional supply chains. Key sectors include processed food and chemicals & plastics;
- Customs Procedures and Trade Facilitation: Simplified customs procedures and enhanced trade facilitation provisions will allow for more efficient administration and expeditious clearance of goods, including the release of express consignments and perishable goods within six hours of arrival;
- Investment: Commitments to prohibit performance requirements on investors as a condition for entering, expanding or operating. The agreement also includes a built-in work programme on investor-state dispute settlement provisions;
- Electronic Commerce: Enhancements in areas such as online consumer protection, online personal information protection, transparency, paperless trading and acceptance of electronic signatures. This provides a more conducive digital trade environment for businesses and provides for greater access;
- Intellectual Property: Raises standards of IP protection and enforcement. Businesses venturing into other member states can obtain protection including for non-traditional trademarks such as sound marks and a wider range of industrial designs;
- Competition: Commitment to maintain competition law regimes based on international best practices and agreed principles. They will also facilitate cross-border enforcement cooperation, including safeguards on the protection of confidential information;
- Government Procurement: A new area of cooperation that is not in any existing ASEAN agreement. Member states are committed to publish laws, regulations and procedures regarding government procurement, as well as tender opportunities.
Respective domestic legislation/endorsement processes to expeditiously bring the RCEP Agreement into force is now underway by the parliaments of each of the 15 states. Once ratified, all these exciting new developments will significantly increase business opportunities and people/logistic movement. In the short foreseeable future, a lot of new potential corporate travel is anticipated, and hopefully our travel industry will return to its pre-COVID glory.😊