The Regional Comprehensive Economic Partnership (RCEP) negotiations include the 10 ASEAN Member States and ASEAN’s six FTA partners – Australia, China, India, Japan, Republic of Korea (ROK) and New Zealand. These countries are important economic partners and neighbours for Australia. RCEP countries include nine of Australia’s top 12 trading partners, and cover almost 60 per cent of Australia’s two-way trade in goods and services, valued at $358.3billion (see Annex 1).
Australia has a broad and diverse range of trade and investment interests in RCEP countries, across all sectors of our economy (agriculture, manufacturing, resources and services). Over the past decade, Australia’s trade with RCEP countries has increased significantly, recording annual growth of 10.6 per cent compared with Australia’s overall annual growth in two-way trade of 7.8 per cent.
The graph below illustrates this growth, showing RCEP countries’ share of Australia’s total two-way trade in goods and services increasing from 46.6 per cent in 2002 to 58.2 per cent in 2012.
Trade in Goods
The progressive elimination of barriers to trade in goods is a key aspect of the Guiding Principles and Objectives for Negotiating the RCEP [PDF] endorsed by Leaders. RCEP countries currently account for almost three quarters (74.6 per cent) of Australia’s exports and 62.5 per cent of two-way trade in goods. Through RCEP, Australia will look to build on the market access commitments already negotiated through existing free trade agreements. Australia will, through RCEP, press for greater liberalisation in regional markets, particularly in the agricultural sector and enhance opportunities to integrate into regional value chains.
Trade in Services
RCEP will seek to remove restrictions and discriminatory measures related to trade in services. RCEP countries currently account for almost half (46.2 per cent) of Australia’s services exports and 38.7 per cent of two-way trade in services. Through RCEP, Australia will seek to build on the outcomes of existing bilateral and regional agreements, and work towards greater liberalisation of services sectors throughout the region. Given the importance of the services sector to the Australian economy, and the key role that many services play in enabling trade, particularly trade through integrated supply chains, RCEP has considerable potential to support greater engagement of the Australian services sector in the region.
RCEP will aim to create a more liberal and competitive regional investment environment. At present, RCEP countries account for 12.9 per cent of total foreign investment in Australia, valued at $280 billion in 2012, and 15.9 per cent of total Australian investment abroad, valued at $206 billion in 2012. Given the strength of Australia’s trade relationships in the region, these figures suggest that our investment profile lags behind that of our trade.
Japan, New Zealand and Singapore are ranked in Australia’s top 10 source countries in terms of foreign investment stock (accounting for nearly 10 per cent of the total), and Chinese investment in Australia is expanding significantly, increasing nearly four-fold over the past five years (2007-12). New Zealand, Japan, Singapore and China are ranked in the top 12 destination countries for Australian investment abroad. However, total Australian investment stocks with RCEP countries over the past 10 years have on the whole hovered between 9 and 14 per cent for inward investment and around 14-16 per cent for outward investment.
As the graphs below illustrate, Australian investment stocks have not grown in line with the increases in Australian trade flows to the region. Australia sees scope to broaden and deepen Australian investment in the region, and regional investment in Australia, to align more closely with the growth in our trade.
The Guiding Principles and Objectives detail additional issues beyond goods, services and investment that RCEP negotiations will address. These include economic and technical cooperation (including on electronic commerce), intellectual property, competition and dispute settlement. Additionally, the negotiations may consider other issues covered by existing FTAs among RCEP countries throughout the course of negotiations.
Australia’s two-way trade in goods and services with RCEP countries, and their ranking in Top 12 Partners, 2012
|Notes: totals may not add due to rounding
|*Other ASEAN countries: Vietnam, Philippines, Brunei, Cambodia, Laos and Myanmar
|Source: DFAT STARS database and ABS catalogues 5302.0 (June 2012), 5368.0.05.004 & unpublished ABS data.