Research & Investment Strategy

RCEP: Integrating Asia beyond trade

Key points

  • The creation of the world’s largest free-trade-zone under the Regional Comprehensive Economic Partnership represents Asia’s defiance against protectionism for a continued pursuit of economic integration
  • Despite wrapped as a trade deal, the key source of gains from RCEP may not actually come from increased trade activity – mainly because most RCEP members already had bilateral free-trade agreements amongst them
  • China, Japan and Korea should be the main beneficiaries of reduced trade barriers as RCEP fills the void of free-trade agreements for them. These gains will accrue over time as existing tariffs are phased out
  • More important than trade could be the accelerated formation of regional supply-chains. By unifying trade standards – particularly in relation to the Rules of Origin – RCEP could reduce transaction costs and encourage production networks to spread across Asia
  • RCEP could also bring geopolitical ramifications to both insiders and outsiders of the pact. Closer economic connections could reduce friction and foster regional stability. The US could see its geopolitical influence weaken in Asia along with reduced economic ties. India may face economic and political marginalisation for not being on the RCEP train, although it could join later

This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date. All information in this document is established on data made public by official providers of economic and market statistics. AXA Investment Managers disclaims any and all liability relating to a decision based on or for reliance on this document. All exhibits included in this document, unless stated otherwise, are as of the publication date of this document. Furthermore, due to the subjective nature of these opinions and analysis, these data, projections, forecasts, anticipations, hypothesis, etc. are not necessary used or followed by AXA IM’s portfolio management teams or its affiliates, who may act based on their own opinions. Any reproduction of this information, in whole or in part is, unless otherwise authorised by AXA IM, prohibited.

This document has been edited by AXA INVESTMENT MANAGERS SA, a company incorporated under the laws of France, having its registered office located at Tour Majunga, 6 place de la Pyramide, 92800 Puteaux, registered with the Nanterre Trade and Companies Register under number 393 051 826. In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.

In the UK, this document is intended exclusively for professional investors, as defined in Annex II to the Markets in Financial Instruments Directive 2014/65/EU (“MiFID”). Circulation must be restricted accordingly. 

© AXA Investment Managers 2021. All rights reserved