Moody’s Investors Service, in its latest Global Trade Monitor report has, stated COVID-19 pandemic is hindering the progress on the Regional Comprehensive Economic Partnership (RCEP) negotiations which may cause the agreement to not conclude by year-end as envisioned. WTO predicts global trade to contract between 13 per cent and 32 per cent this year amid a sharp decline in consumer demand, investment and supply disruptions. According to Moody’s the key reasons for this are the Coronavirus-induced drop in consumer demand and investment in the current quarter, and disruptions along supply chains and shipping routes resulting from lockdowns.
The rating agency expects consumer demand to only recover gradually in the second half of the year. COVID-19 will also lead to more fragmentation of trade in essential goods as more than 90 countries have imposed restrictions or bans on exports of medical and food supplies, as shortages pose unprecedented challenges for governments and health systems.
RCEP is a proposed free trade agreement (FTA) in the Asia-Pacific region between the 10-member states of Asean, namely, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Five of Asean’s FTA partners including Australia, China, Japan, New Zealand and South Korea are also part of RCEP.
India, which is also Asean’s FTA partner, opted out of RCEP in November 2019, claiming its key concerns were not addressed.