Business economists critical of claimed RCEP economic benefits

November 7, 2019: Business economist Ian Verrender has criticised the Regional Comprehensive Economic Partnership as another example of overlapping bilateral and regional trade agreements with complex rules that will not deliver claimed economic benefits but could do harm.

He notes that a recent survey by the Australian Chamber of Commerce and Industry found that “the majority of free trade agreements are not relevant to them,” partly because businesses face multiple agreements with different rules. An Australian exporter to Japan, for example, will have to navigate the rules of the Trans-Pacific Partnership (TPP-11), the RCEP and the Japan-Australia bilateral deal.

Verrender says these deals can also do harm by imposing costs on consumers and governments if they include rules that give pharmaceutical companies longer monopolies to delay the availability of cheaper generic medicines and give foreign investors rights to sue governments (ISDS).

Mike Bird writing in the Wall St Journal quotes a study of RCEP economic impacts that predicted marginal economic gains for Australia and most RCEP countries even when it included India. He argues that India’s withdrawal reduces the economic outcomes to a “paper tiger.”