In November of this year, an agreement was signed announcing the creation of a large free trade zone — the Comprehensive Regional Economic Partnership (CREP). This became a landmark event for the world economy, because the potential of the project is simply huge.
ElitExpert found out what the emergence of the National Economic Development Committee means and how it will affect Ukraine.
What is VREP?
The idea of creating the WREP has been floating in the air for about 10 years. Nevertheless, repeated postponements of the signing dates, public dissatisfaction with the conditions, disagreements between the participants and India's withdrawal from the deal, China's attention being diverted to the "economic war" with the USA - all this convinced that there would be no VREP. Moreover, in this part of the world there is an even more global project of the Trans-Pacific Partnership (TPPTP), a trade and economic organization in the Asia-Pacific region.
However, this happened and, remarkably, during the crisis caused by the coronavirus, when countries are increasingly closing down and switching their attention to the issues of restoring national economies. Moreover, ironically, the signing of the VREP coincided with the sunset of the political career of President Donald Trump, who managed to withdraw the United States from the VPTTP — the latter weakened with the loss of Washington in its ranks.
The new union included 15 countries, including representatives of the above-mentioned VPTTP: China, Australia, New Zealand, South Korea and Japan, Brunei, Vietnam, Indonesia, Cambodia, Laos, Malaysia, Myanmar, Singapore, Thailand and the Philippines. A third of world trade, the total GDP of the participating countries is about 25 trillion dollars (30% of world GDP), and the population is 2,2 billion people.
For comparison, the European Union is 18 trillion GDP and about 500 million people, NAFTA (USA-Canada-Mexico) is 20 trillion GDP and half a billion inhabitants, the Eurasian Economic Union (Russia, Armenia, Belarus, Kazakhstan, Kyrgyzstan) is 2 trillion and about 180 million people.
The largest free trade zone in the world
Countries with which free trade zone (FTA) agreements have already been signed are considered to be participants of the VREP. Therefore, from a trade point of view, the VREP acts as a unifier of these agreed with additional expansion provisions. Among them are the issues of regulation of electronic commerce, competition policy, protection of intellectual property and other relevant issues that did not previously appear in existing agreements. VREP is aimed, in addition to trade liberalization, at the simplification of mutual investments, the movement of digital technologies and intellectual property. But there are exceptions: public procurement and agriculture remain the personal affairs of each country, no liberalization applies to them.
At the same time, a special role is planned to be given to the stimulation of regional production chains: the preferences will include goods whose production is distributed among the countries participating in the VREP. This means that manufacturers, including multinational companies, will benefit from locating sites here.
Of course, it was not without politics. The creation of the WREP is a stone in the American garden on the part of the Chinese. The United States tried its best to restrain Beijing's influence in the region, but here the round remained with the Celestial Empire.
For Japan and the Republic of Korea, the signing of the VEP should be considered as an alternative to the tripartite FTA "Japan - China - the Republic of Korea". Previously, the parties had repeatedly attempted to conclude a trilateral free trade agreement, but each time they failed due to political differences. Ratification of the VREP partially solves this problem.
Finally, for Australia and New Zealand, being medium-sized countries and at the same time participants of the alternative project of the VPTTP, the signing of the VREP is a classic example of the demand to "sit on two chairs" and diversify their trade flows as much as possible.
What does this mean for Ukraine?
Unfortunately, our country cannot be called a major player in the world economic market, and therefore, the creation of the National Economic and Trade Union will not shake our position in any way. Nevertheless, this project can bring both negative and positive consequences to Ukraine.
Speaking of the negative, the REP countries invested in Ukraine, albeit not in a large volume, but now these resources can be redistributed. In addition, eastern exporters will strengthen their positions in other markets, in particular European ones, crowding out our suppliers.
However, it is possible to get a positive result from this, but for this you need to make an effort. In particular, these countries, especially China, can provide low-cost loans without political consequences. Taking into account the fact that the IMF does not yet intend to provide our country with such a vitally necessary tranche, this may interest Kyiv. However, this will certainly not please the Western partners, on which Ukraine is extremely dependent.
Another option is that Ukraine can become a kind of transshipment point between the EU and the REP, but for this it will be necessary to do quality work on the part of the state.
