Assessing the economic impact of the Regional Comprehensive Economic Partnership: a dynamic GTAP analysis Global and regional benefits of RCEP

Abstract

Ten-member countries formally submitted their ratifications, reaching the activation threshold for the Regional Comprehensive Economic Partnership (RCEP), the largest global free trade agreement, which officially came into effect for these nations on 1 January 2022. Our study combines macroeconomic forecasts with policy impact assessments, utilizing the GTAP model and dynamic recursive methodologies to predict the impact of RCEP’s implementation on its member countries and the global economy. Our findings reveal the following: (1) The countries benefiting most from RCEP’s enactment are Japan, Australia, New Zealand, Vietnam, and Thailand. (2) In the short term, RCEP benefits ratifying nations, whereas non-effective ratifying and non-member countries experience varying economic losses. (3) However, over the long term, the economic spillover effects of RCEP are projected to foster global economic development, enhance social welfare, and increase global trade. Based on these conclusions, China and Southeast Asia should expedite the integration of the “Belt and Road” initiative with RCEP, tightly interlinking with the regional industrial and supply chains within the RCEP area to enhance the competitiveness of domestic industries and enterprises.